Is there a minimum participation rate guarantee?
It is important to know if the participation rate is guaranteed for the entire term of the contract or not. A product on the market may advertise a higher participation rate in comparison to other products, but may be guaranteed for only one year, at which point the company can decrease the rate in following years. If it were not guaranteed for the entire term, it would be important to know if there is a minimum participation rate guarantee. This would assure you that the insurance company could not come back and surprise you with a participation rate that is lower than you could possibly expect. Also, it is important to note that the participation rate is not the “end all” when comparing products. One participation rate may be significantly higher than another, but the indexing method of the two products may also be quite different. It is possible that the lower participation rate may credit a higher rate of interest than the higher participation rate, depending on the method of index
