A spread rate describes a way the amount of interest added to your annuity may not reflect the full change in the index. Fixed indexed annuities earn interest based on changes in a market index and are guaranteed to never be less than zero.
Participation rates, cap rates, and spread rates all describe ways the amount of interest added to your annuity may not reflect the full change in the index. It is important that you understand the differences among various annuities so you can choose the kind that best fits your needs.
Your value in an annuity contract is the premiums you have paid, less any applicable charges, plus interest credited. The insurance company uses the value to figure the amount of most of the benefits that you can choose to receive from an annuity contract. Fixed annuities guarantee your money will earn at least a minimum interest rate.
The NAIC Buyer’s Guide is not meant to offer legal, financial or tax advice. You may want to consult independent advisors. Make sure you are satisfied with the answers from your agent or the company before you buy.
Receive your free NAIC Buyer’s Guide to Fixed Deferred Annuities at
annuitiesexplained.org/get-your-free-consultation-with-me/. Watch short educational videos at
youtube.com/@AnnuitiesExplained. Contact Jeffrey Scott McLeod, LUTC for personalized guidance tailored to your state.
Educational content provided by Jeffrey Scott McLeod, LUTC, National Insurance Producer License #558629. This is for informational purposes only and is not a recommendation to buy or sell any annuity. Guarantees are subject to the claims-paying ability of the issuing insurance company. Always consult your own advisor and read the full NAIC Buyer’s Guide. For residents of your state.
Jeffrey Scott McLeod, LUTC — National Producer #558629.
Questions? Contact Jeff@AnnuitiesExplained.org.
Source: © 2025 National Association of Insurance Commissioners (NAIC). Reprinted with permission. Further reprint or distribution strictly prohibited without written permission of NAIC.
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