Annuities
Why do deferred annuities commonly carry surrender charges in the early years?
Answer and explanation
Answer: A. A surrender charge lets the insurer recover acquisition costs it expected to spread across the contract's life, which is why the charge typically declines and then disappears. It is a contractual feature rather than a statutory requirement, and it is not tied to the annuitant's age.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, surrender and withdrawal charges
More annuities questions
- 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?
- A worker buys an annuity at age 45 and plans to begin income at age 65 after years of tax-deferred accumulation. Which classification best fits?
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