What is a cap? What is a participation rate?

A Cap is a limit on the amount a policy owner can earn in a given year. For example, a Cap of 6% means the potential maximum annual return would be 6%. A Participation Rate is simply the percentage of an index that is used to calculate the return that a policy provides. For example, assume that a given crediting method results in an 10% interest credit. If the participation rate is 70%, then the final level of interest credited to the contract owner is 7% (70 percent of 10%).