Group Life & AnnuitiesQuestion 110 of 315
An indexed annuity has a 0% floor and a 6% cap. If the linked index returns negative 12% in a contract year, what interest is credited to the owner's account that year?
a.Negative 6%
b.0%
c.Negative 12%
d.6%
Explanation
The floor prevents loss in a down year. With a 0% floor, the worst that can happen is that no interest is credited; the owner's principal is not reduced because of the index decline. The cap would only matter in an up year, limiting an above-cap gain.
Law Reference: Cal. Ins. Code §10168.25Practice all 315 questions free — no signup required.
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