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 Commentary
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.
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Mortgages: How Much Can You Afford?
Buying Life Insurance: Term Versus Permanent
Understanding Your Mortgage
Mortgages: Fixed-Rate Versus Adjustable-Rate
See also: 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