Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

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If the owner of an annuity contract stops making premium payments prior to payout, the annuitant has non-forfeiture options available based on the cash value accumulation prior to stop payment of premiums. What is one of the more common options?
  1. Permit the contract to become a paid up contract where the payments are based on the paid amount
  2. Permit the contract to become paid and refund the premiums to the annuitant less any fees, costs, and penalties
  3. Permit the contract to be in forbearance and allow the annuitant time to catch up on their payments
  4. Permit the contract to be renegotiated for a better premium rate.
Explanation
Answer: A - If an annuitant stops making premium payments, one of the more common non-forfeiture options available is to permit the contract to become paid up and the payments to be calculated based on the paid amount. This prevents the annuitant from losing the money invested and allows them to still receive payouts in the future, although they will be smaller than they would have been if premium payments had continued.
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