A renewal interest rate is the interest rate the insurance company credits after the initial rate period ends. In a fixed deferred annuity, the company sets another fixed interest rate for the next rate period, and that new rate may be higher or lower than the earlier rate.
During the accumulation period, money in a fixed deferred annuity earns interest at a rate the insurer sets. That rate is fixed for some period, usually a year. After that rate period ends, the insurance company sets the renewal interest rate for the next rate period.
The NAIC guide explains that fixed deferred annuities also have a guaranteed minimum interest rate. That is the lowest rate the annuity can earn, and it is stated in the contract and disclosure and cannot change as long as you own the annuity. This means the renewal rate can change from one period to the next, but it cannot go below the guaranteed minimum interest rate in your contract.
Before buying, you should ask when the renewal interest rate will be announced and how the insurance company will tell you what the new rate will be. You should also review the contract and disclosure carefully so you understand how long the initial rate lasts and what guarantees apply after that period ends.
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