Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

Start a Study Session Sign up for Question of the Day
Fred owns a 10 year Market-Value Adjusted Annuity. If Fred decides to cash in his contract after four years and the market values decreased by 4% during that time, what would the market value adjustment be for the contract?
  1. The market value adjustment would be positive and help offset the surrender charge.
  2. The market value adjustment would be negative and increase the surrender charge.
  3. The market value adjustment would be unchanged and the surrender charge constant.
  4. The market value adjustment would be positive and eliminate the surrender charge.
Explanation
Answer: A - If Fred decides to cash in his market value adjusted contract after four years and the market value decreases 4% during that time, the market value adjustment would be positive and help to offset the surrender charge Fred would pay for cashing in early. This increase or decrease in value is also affected by whether or not the market value adjusted annuity is registered or not. When market value adjusted annuities are registered, the adjustment applies to both the principal and interest.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz