What does Assumed Interest Rate - AIR mean?

The Assumed Interest Rate is practically the interest taken into calculations by the insurance company. This interest rate plays a very important role for the policy holder, as by it will be possible to calculate the value of the installments the annuitant is eligible to receive. Factors which are taken into consideration are the policy holder's personal details such as age, and of course what options he/she wishes to choose: whether it is a short term contract or a lifelong one and whether there will be spousal coverage or not.

Assumed Interest Rate explained

Assumed Interest Rate constitutes the minimum of interest which has to be achieved so as to fulfill the company's needs in terms of costs. Practically, by investing the higher the interest earned the higher the profits as well, and this goes in the case of insurance businesses and contracts as well. When there is a higher interest gained by the investments the policy holder makes, this will generate more profit both for him and for the insurance company as well.