Carrier comparison

Not every carrier credits the same index the same way.

Cap rate, participation rate and spread decide how much of the index move actually lands in the policy.

If the index returns

12%

Carrier	Crediting strategy	Cap	Par rate	Floor	Credited ↓
					10.50%
					9.25%
					8.50%
					6.25%
					3.10%

Cost of the wrong carrier

$37,000

In a single year, on a $500,000 account value — 7.40% of crediting difference between the best and worst option in this table.

What is a cap rate, in plain English?

The index goes up 18%. A 10% cap means your policy is credited 10% — the ceiling. A participation rate is the slice you get of the move (140% par on a 9% index is 12.6%). A spread is a flat amount subtracted first. The floor — usually 0% — is what protects you when the index is negative.

These rates are not permanent. Carriers adjust them, which is why the illustration is only as good as the carrier behind it.