Adjustment Index
A modification made to a piece of numerical data, or a set of numerical data, by a product of some type of a mathematical formula. There are a number of different types of adjustment indices, ranging in scale and purpose from mortgage rate adjustment to handicapping a golfer's score. Investopedia Says:
In consumer finance, an adjustment index is commonly used to adopt adjustable rate mortgages to changes in the economy by combining a number of market interest rates to form a benchmark.
An adjustment index is also used in life insurance policy mathematics to account for the increased risk of the insured living one more year.
Related Terms:
Adjustable-Rate Mortgage - ARM
Adjustment Frequency
Fixed Interest Rate Mortgage
Interest Rate
London Interbank Offer Rate - LIBOR
Permanent Life Insurance
Term Life Insurance
Treasury Index
Universal Life Insurance
Variable Life Insurance Policy |