Assumed Interest Rate - 401k Glossary

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Assumed Interest Rate - 401k Glossary

Assumed Interest Rate is the prescribed interest rate selected by insurance companies to determine the value of annuity contracts and the amount of annuity payments that will be paid out to investors, upon maturity of their investments. The monthly payments provided by an annuity depend on:

Assumed Interest Rate
Spouse Coverage Covenants
Age of Annuitant
Type of Annuity Contract Chosen

Insurance companies use the Assumed Interest Rate as a minimum prescribed rate that must be earned on investments in order to cover their overhead costs as well as make a decent profit.