RAA Annuity Riders & Optional Benefits

Question 1

What does a Guaranteed Minimum Withdrawal Benefit (GMWB) rider primarily guarantee?

Accepted Answer

A minimum percentage of the benefit base can be withdrawn annually regardless of account performance

Answer

The policy's cash surrender value will never decrease

Answer

The annuity will provide lifetime income without ever depleting the account

Answer

Death benefits will always equal the original premium paid

Question 2

Which death benefit rider guarantees that a beneficiary will receive at least the total premiums paid into the contract?

Accepted Answer

Return of Premium Death Benefit rider

Answer

Annual Reset Death Benefit rider

Answer

Earnings Enhancement Death Benefit rider

Answer

Stepped-Up Death Benefit rider

Question 3

What is the primary purpose of a Guaranteed Minimum Accumulation Benefit (GMAB) rider?

Accepted Answer

To ensure the account value will reach a specified minimum after a defined holding period

Answer

To guarantee income payments for the owner's entire life

Answer

To protect against market losses exclusively during the payout phase

Answer

To guarantee the dollar amount of each withdrawal regardless of performance

Question 4

The 'step-up' feature in a Guaranteed Minimum Death Benefit (GMDB) rider means the death benefit:

Accepted Answer

Locks in at the highest account value on each contract anniversary

Answer

Increases by a fixed percentage each year automatically

Answer

Steps up when additional premium contributions are made

Answer

Increases in cost as the insured's age increases

Question 5

Which of the following best describes an income rider's 'benefit base' on a deferred annuity?

Accepted Answer

A separate notional value that grows at a guaranteed rate and is used to calculate future income payments

Answer

A provision that accelerates annuitization in cases of terminal illness

Answer

A feature that automatically converts the annuity to an immediate annuity at age 70

Answer

An optional provision allowing partial withdrawals without surrender charges

Question 6

What is the typical annual cost range for adding an income benefit rider to a variable annuity?

Accepted Answer

0.50% to 1.50% of the benefit base annually

Answer

0.10% to 0.25% of the benefit base annually

Answer

2.00% to 3.50% of the benefit base annually

Answer

3.50% to 5.00% of the benefit base annually

Question 7

A 'waiver of surrender charge' rider is most likely triggered by which event?

Accepted Answer

The owner being confined to a nursing home or requiring qualifying long-term care

Answer

The annuity owner reaching age 59½

Answer

The annuity reaching its stated maturity date

Answer

A change in tax law affecting annuity distributions