Annuities
A fixed annuity states a minimum rate and a current rate. What is the difference?
Answer and explanation
Answer: C. The guaranteed minimum is the floor the insurer promises for the contract, while the current rate is what is actually being credited and may be changed, though it may not fall below the guaranteed minimum. The guarantee is the promise and the current rate is the practice.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, minimum versus current interest
More annuities questions
- During which annuity phase does the contract value grow before scheduled income payments begin?
- How are accumulation units converted in a variable annuity when the contract owner chooses to annuitize?
- How does a fixed indexed annuity credit interest?
- In an annuity contract, whose life measures the income payments?
- The index referenced by a fixed indexed annuity falls sharply in a year. What ordinarily happens to the contract value?
- What benchmark rate is used in variable annuity payout calculations to determine whether monthly annuity payment amounts increase or decrease?
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