An annuity participation rate is the percentage of the index gain that is credited to the annuity. For example, if the participation rate is 80% and the S&P 500 gains 10%, the annuity credits 8%. Participation rates are set by the insurance company and can change each year.
Key Points
- Participation rate: percentage of index gain credited to annuity
- Example: 80% participation rate, S&P 500 gains 10% = 8% credited
- Participation rates set by insurance company and can change each year
- Higher participation rate = more growth potential
- An independent agent can compare participation rates across indexed annuity carriers