Group Life & AnnuitiesQuestion 704 of 716
In a fixed indexed annuity, a participation rate of 80% means the contract credits:
a.Nothing unless the index falls
b.A guaranteed 80% of every premium payment that the owner deposits into the contract
c.A guaranteed 80% return each year
d.80% of the index's gain, subject to any cap and floor
Explanation
The participation rate is the share of the index's gain that is credited, so 80% credits 80% of the measured index increase, still limited by any cap and protected by the floor. It is not a share of premium or a guaranteed return.
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)