Questions: When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement? A. Final contract settlement will be reduced B. Final contract settlement will be increased C. Final contract settlement will not be affected D. Final contract settlement will be held in escrow until surrender charges are paid

When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement? A. Final contract settlement will be reduced B. Final contract settlement will be increased C. Final contract settlement will not be affected D. Final contract settlement will be held in escrow until surrender charges are paid
Transcript text: When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement? A. Final contract settlement will be reduced B. Final contract settlement will be increased C. Final contract settlement will not be affected D. Final contract settlement will be held in escrow until surrender charges are paid
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Solution

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Solution Steps

Step 1: Understand the Question

The question asks how surrender charges affect the final contract settlement when an annuity contract has been fully surrendered.

Step 2: Analyze the Options

The options provided are:

  • A. Final contract settlement will be reduced
  • B. Final contract settlement will be increased
  • C. Final contract settlement will not be affected
  • D. Final contract settlement will be held in escrow until surrender charges are paid
Step 3: Apply Knowledge of Annuity Contracts

When an annuity contract is fully surrendered, surrender charges are typically deducted from the contract value. This means the final amount received by the contract holder will be less than the total value of the annuity due to these charges.

Final Answer

A. Final contract settlement will be reduced

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