Assumed Interest Rate
Updated: 18 January 2025
What Does Assumed Interest Rate Mean?
The assumed interest rate (AIR) is a percentage used to determine the periodic income an annuitant will receive when their annuity begins to pay out. This rate is combined with factors such as the insured’s age at the time of annuitization and the cost of the annuity.
The AIR is also referred to as the assumed investment return.
Insuranceopedia Explains Assumed Interest Rate
The assumed interest rate (AIR) represents a portion of the total amount the annuitant pays for the annuity. A higher AIR percentage results in a larger annuity income.
The AIR serves as the minimum payment the annuitant will receive. If the annuity’s investments perform well, the payments could exceed the AIR.
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