RAA Annuity Riders & Optional Benefits 2

Question 1

What is the key distinction between a Guaranteed Lifetime Withdrawal Benefit (GLWB) and a standard GMWB rider?

Accepted Answer

A GLWB guarantees that withdrawals continue for the owner's entire lifetime, even after the account value is depleted

Answer

A GLWB allows withdrawals only during the accumulation phase

Answer

A GLWB always provides a higher guaranteed withdrawal rate than a GMWB

Answer

A GLWB applies only to fixed annuities while GMWB applies only to variable annuities

Question 2

Under a long-term care (LTC) rider on an annuity, benefits are typically triggered when the owner:

Accepted Answer

Cannot perform a specified number of Activities of Daily Living (ADLs) or has severe cognitive impairment

Answer

Reaches age 65 and formally retires from employment

Answer

Has held the annuity contract for at least 10 years

Answer

Requests a partial surrender exceeding $25,000

Question 3

What does a 'doubler' or 'multiplier' feature in an annuity LTC rider typically do?

Accepted Answer

The monthly income benefit doubles once qualifying long-term care conditions are met

Answer

The surrender charge period is doubled for policies that include the LTC rider

Answer

The death benefit doubles upon the owner's death

Answer

The credited interest rate doubles during the first year of the contract

Question 4

Which factor most directly affects the pricing of a Guaranteed Minimum Income Benefit (GMIB) rider?

Accepted Answer

The prevailing interest rate environment and the owner's age at annuitization

Answer

The contract owner's credit score

Answer

The number of beneficiaries named in the contract

Answer

The insurance company's common stock price

Question 5

When comparing GLWB riders across different annuity contracts, which element most significantly affects the benefit's long-term value?

Accepted Answer

Whether the benefit base grows at simple or compound interest during the deferral period

Answer

The insurance company's most recent AM Best financial strength rating

Answer

The marketing name of the rider as branded by the insurer

Answer

The number of investment subaccounts available within the contract

Question 6

A 'premium bonus' rider on a deferred annuity typically works by:

Accepted Answer

Adding an immediate percentage increase to the contract value at purchase, subject to a vesting schedule

Answer

Returning all premiums to the owner after 10 years with no penalties or fees

Answer

Guaranteeing premium payments from the insurer if the owner becomes totally disabled

Answer

Allowing premium payments to be made tax-free directly from a 401(k) account

Question 7

What is a 'spousal continuation' option in the context of annuity contracts?

Accepted Answer

A feature allowing a surviving spouse to continue the annuity contract under the original terms rather than taking a lump-sum death benefit

Answer

A rider that continues premium payments into the contract if the primary earner dies

Answer

A provision requiring both spouses to be named as joint annuitants on the contract

Answer

An option that extends the surrender charge period for surviving spouses under age 59½