What Is Participation Rate In Annuities?

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   Steve Savant

   Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona

   Generally speaking, tax deferred index annuities use domestic and foreign indices for its crediting method. But there are three crediting method types within any one policy (sometimes more) that play a role in what you receive from the indice performance: spreads, rate caps and participation percentage. Participation determines what portion of the performance is credited to the annuity policy, i.e. 70% of a 10% net return would credited 7%.

   Answered on September 4, 2013

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