The Annual Point-to-Point method is a way of calculating interest credits in an indexed life insurance policy. It measures the performance of an index (like the S&P 500) over one year to determine if interest should be added to your policy’s cash value.
If the index grows during the year, the insurer credits a portion of that growth to your policy. However, if the index drops, your cash value is protected, and no interest is added. This method balances growth potential and protection from market downturns.