Participation Rate

Importance: 0.57

Is a company: no

Is a proper noun: no


  • performance rate
  • percentage

Definition of Participation Rate

  1. As it relates to indexed annuities, a participation rate determines the percentage at which changes in a stock index will affect the profits of an indexed annuity. For example, if the annuity's participation rate is 80% and the stock index increases by 10% in a year, the annuity will see a profit of 8% that year (80% of 10%).

Related Terms and Acronyms

  • Indexed Annuity Definition,
    • An annuity where investment performance is pegged to a stock index.
  • Margin Bank,
    • The difference between the cost and the selling price.
    • Expressed as percentage points, the amount that a lender adds to an index to arrive at the final interest rate. For example, if the index is 9 percent and the margin 2.75 percent, the final interest rate is 11.75 percent.
  • Annual Crediting Cap Bank,
    • The highest rate that can be credited to an equity-indexed annuity in a year.
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