CAS Annuity Riders and Contract Provisions Flashcards
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Read the first 6 CAS Annuity Riders and Contract Provisions flashcards as text
Which type of annuity rider allows an owner to receive income payments for life while also preserving the ability to pass any remaining account value to a beneficiary?
Answer: Guaranteed Lifetime Withdrawal Benefit (GLWB) rider
A GLWB rider guarantees lifetime income withdrawals while keeping the account intact, so any remaining account value at death passes to named beneficiaries rather than the insurer.
What is the typical purpose of a 'joint and survivor' annuity payout option?
Answer: To continue income payments to a surviving spouse after the primary annuitant dies
A joint and survivor annuity option continues income payments to a surviving co-annuitant (typically a spouse) after the primary annuitant dies, often at a reduced percentage (e.g., 50%, 75%, or 100%).
Under a 'period certain' annuity payout option, payments are guaranteed for:
Answer: A specified number of years, regardless of whether the annuitant is alive
A period certain option guarantees annuity payments for a fixed number of years (e.g., 10 or 20 years); if the annuitant dies before the period ends, payments continue to the beneficiary for the remainder of the term.
What does a 'premium bonus' rider on an annuity typically offer?
Answer: An additional percentage credited to the initial or subsequent premiums paid
A premium bonus rider credits an additional percentage (e.g., 5–10%) to premiums paid into the contract, boosting the initial account or benefit base, though often offset by higher surrender charges or lower caps.
Which contract provision in a fixed-indexed annuity limits the maximum interest credited in a given period?
Answer: Cap rate
The cap rate sets the maximum interest rate that can be credited to a fixed-indexed annuity in a given period, regardless of how high the linked index actually performs.
In a fixed-indexed annuity, what does the 'participation rate' determine?
Answer: The percentage of the index's gain credited to the annuity
The participation rate determines what percentage of the linked index's positive performance is credited to the annuity — for example, a 70% participation rate means only 70% of the index gain is applied.