Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
50% - Moderately

Participation Rate

Synonyms:percentage, performance rate
Filed Under: annuities
Tags: annuity, rates

Definition of participation rate

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:

  • annual crediting cap   The highest rate that can be credited to an equity-indexed annuity in a year.
  • indexed annuity   An annuity where investment performance is pegged to a stock index.
  • margin   The difference between the cost and the selling price.

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