Intermediaries
Minnesota Life as your partner
Our markets and products
| - | Our markets - are we a good fit for your clients? | |
| - | Term Life insurance | |
| - | Group Universal Life insurance | |
| - | Interest crediting rate | |
| - | Variable Group Universal Life insurance | |
| - | Combination plans | |
Get more
Materials download center
About Minnesota Life
Alliances
Group Universal Life insurance — interest crediting rate
» What is the
Group Universal Life (GUL) interest crediting rate?
» How is
the rate determined?
» How is the
rate applied?
» Historical
interest crediting rates
» Why do we use
this method?
What is the Group Universal
Life (GUL) interest crediting rate?
The interest crediting rate is the rate of interest Minnesota Life credits
to the account value of your life insurance policy. The rate is reviewed
monthly to make sure it's competitive.
How is the rate determined?
Each month, Minnesota Life sets a new funds crediting rate. This rate
reflects yields currently available in the market. Our crediting rates
are not based on an index. Our investment staff actively manages our portfolio
and makes investment allocation decisions based on the relative attractiveness
of various markets, investment types, maturities, etc. No single index
can adequately represent this approach. We believe that over time our
investment management strategy will outperform a fixed-income investment
index with similar portfolio characteristics.
How is the rate applied?
Any money you contribute to the cash value portion of your policy during
a particular month will earn the rate established that month for the next
four years. At the end of four years, interest will then be credited at
the current rate for that month.
With this method interest credited to each account better reflects
market conditions at the time the funds are deposited.
Historical interest crediting rates
| Rates as of January 1 | Highest rate credited during year |
Equivalent yield on a taxable investment* | |
| 2005 | 4.0% | – | – |
| 2004 | 4.25% | 4.5% | 6.25% |
| 2003 | 5.0% | 5.0% | 6.94% |
| 2002 | 5.5% | 6.0% | 8.33% |
| 2001 | 7.0% | 7.0% | 9.72% |
| 2000 | 7.0% | 7.5% | 10.42% |
| 1999 | 6.0% | 7.0% | 9.72% |
| 1998 | 6.5% | 6.5% | 9.03% |
| 1997 | 6.5% | 7.0% | 9.72% |
The crediting rate is guaranteed never to fall below 3%.
*Assumes 28% marginal tax rate
Why do we use this method?
Our goal is to balance a desire for relative stability in crediting rates
with the need to respond to changes in market conditions. The rate is
based on current market conditions and yields available to Minnesota Life
on new investments. So, it reflects the decisions of our investment professionals
as they actively manage assets to generate the most favorable results.
Yet we believe, because we follow the general pattern of the market, our rate is
more stable than market rates.
We believe our interest crediting method credits interest in a competitive, equitable and responsive way — and will provide our policyholders with superior long-term results on their cash values.
