You send the annual premium on March 3. The index segment it joins might not open until March 15, or until April 1, or in some contracts until the next policy anniversary. Between those dates the money sits in a holding account, usually the fixed account, earning the declared rate. That's the sweep, and how often it happens is one of the less visible ways two IULs differ.

The most common structure opens a new segment every month on the policy's monthly anniversary. Premium received during the month is swept into that segment, which then runs its full term, typically twelve months, from that date. So a policy paid monthly ends up with twelve small segments running at once, each with its own start date, its own end date, and the cap that was in effect when it opened.

Some contracts sweep less often, quarterly or only on the anniversary. On those, a premium paid the week after a sweep can wait months in the holding account. That's not lost money, since the fixed rate is credited the whole time, but it's a stretch where an index that runs up 8% does nothing for that premium. Ask the carrier for the sweep schedule. It's in the contract.

Timing the premium is the practical use of knowing this. If your sweep date is the 15th, a premium that lands on the 12th waits three days and one that lands on the 16th waits a month. Move the draft date to land a few days before the sweep and the wait mostly disappears. On a monthly-sweep contract that's a small gain. On an anniversary-only contract it can be most of an index year.

The segment structure also explains why twelve segments can show twelve different credits in one year, and why a cap change in July applies to segments opening after July and not to the ones already running. The three ways carriers measure a segment once it's running are in three ways an IUL can count your index year.

Two questions for the carrier's service line, and both take about a minute: what are my sweep dates, and what's the current rate on money waiting in the holding account. Then move the premium draft to land just ahead of the sweep.