CAS Annuity Riders and Contract Provisions Flashcards
6 cards from real CAS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAS Annuity Riders and Contract Provisions flashcards as text
What does a Guaranteed Minimum Income Benefit (GMIB) rider on a variable annuity guarantee?
Answer: The right to annuitize based on a minimum benefit base after a waiting period
A GMIB rider guarantees the contract holder the right to annuitize based on a minimum benefit base (often growing at a set rate) after a specified waiting period, regardless of actual account performance.
Which annuity rider provides a guaranteed percentage increase to the benefit base each year the contract owner does not take withdrawals?
Answer: Rollup rider
A rollup rider (also called a deferral bonus or step-up rider) increases the benefit base by a guaranteed percentage — commonly 5–7% — each year the owner defers withdrawals.
What is the primary purpose of a Return of Premium (ROP) death benefit rider on an annuity?
Answer: To ensure the death benefit is at least equal to total premiums paid
An ROP death benefit rider ensures that if the annuity owner dies and the account value is less than premiums paid, the beneficiary receives at least the total amount of premiums contributed.
A Guaranteed Minimum Withdrawal Benefit (GMWB) rider on an annuity guarantees that the contract owner can withdraw:
Answer: A specified percentage of a benefit base annually until the premium is recovered
A GMWB rider guarantees the owner can withdraw a set percentage (e.g., 5–7%) of the benefit base each year until the total premiums paid are recovered, even if the account value drops to zero.
Which annuity contract provision allows a policyholder to withdraw a portion of the contract value each year without triggering surrender charges?
Answer: Free withdrawal provision
The free withdrawal provision (commonly 10% per year) allows the annuity owner to take partial withdrawals up to a specified amount annually without incurring surrender charges.
What does a nursing home or confinement waiver rider on an annuity typically allow?
Answer: Surrender charges to be waived if confined to a nursing home for a qualifying period
A confinement waiver rider waives surrender charges if the annuity owner is confined to a qualified nursing home or care facility for a minimum period (typically 30–90 consecutive days).