Spread in the context of insurance and annuities generally refers to the difference between two related rates, such as the credited interest rate on a fixed annuity and the insurer's portfolio yield, or the gap between cap rates and underlying index performance in an indexed annuity. Spread represents the margin that covers insurer expenses, capital costs, and profit. In indexed products, spread can be used as a pricing lever; for example, an index strategy may credit the index return minus a stated spread. In life insurance, spread may also describe the difference between portfolio earnings and rates credited to policy cash values. Managing spread is central to carrier profitability and product design.

Advisors encounter the term spread when comparing fixed and indexed annuity crediting methods, structured annuity buffers, or carrier explanations of how caps and participation rates are set. They may explain to clients that carriers earn a spread between investment returns and what they credit to contracts and that this spread can change as markets evolve. When evaluating products, advisors look at historical stability of spreads, responsiveness of caps and participation rates, and how spread changes affect client outcomes. Understanding spread helps advisors translate carrier pricing mechanics into clear, client-friendly explanations and manage expectations around future credited rates and product performance.