Assumed Interest Rate
Updated: 29 February 2024
What Does Assumed Interest Rate Mean?
The assumed interest rate (AIR) is a percentage given to an annuitant that represents the amount they will be getting when their annuity starts to pay them a period income. This rate is combined with other factors, such as the age of the insured upon annuitization and the price of the annuity.
It is also known as assumed investment return.
Insuranceopedia Explains Assumed Interest Rate
The assumed interest rate is the portion of the total amount the annuitant pays for the annuity. The higher the percentage of AIR, the bigger the annuity income.
The AIR is only the minimum payment the annuitant will receive. They could be paid more if the annuity's investments perform well.
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