Annuities
The index referenced by a fixed indexed annuity falls sharply in a year. What ordinarily happens to the contract value?
Answer and explanation
Answer: C. A fixed indexed annuity carries a floor, commonly zero, so a negative index result does not reduce the credited value. Proportionate loss describes a variable contract, and participation rates and caps operate on gains rather than creating losses.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, floor in an indexed contract
More annuities questions
- Why might an annuity be used to accumulate funds for education?
- A buyer wants to fund an annuity gradually over working life and take income at retirement. Which design fits?
- A contract holder elects to begin receiving income. Which phase has begun?
- A deferred annuity stops building value for future income and begins making scheduled income payments. Which phase has begun?
- A fixed annuity states a minimum rate and a current rate. What is the difference?
- A married couple wants annuity income to continue while either of them lives. Which option fits?
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