Group Life & AnnuitiesQuestion 700 of 716
Recommending a deferred annuity with a long surrender period to an elderly client who needs access to funds soon is a suitability concern because:
a.The death benefit would be too high
b.Annuities carry no fees or surrender charges of any kind, so liquidity is never a concern for any client
c.The surrender charges and limited liquidity may not fit the client's short time horizon and cash needs
d.Annuities are unsuitable for any client of retirement age
Explanation
A long surrender period ties up funds a client may soon need, exposing them to charges, which conflicts with a short time horizon and liquidity needs. Annuities are not universally unsuitable, but the fit matters.
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Related questions on this topic
- Many deferred annuities include a free withdrawal provision allowing the owner to withdraw, without a surrender charge, up to:
- A withdrawal of taxable gain from a nonqualified annuity before age 59 1/2 is generally subject to:
- When determining the suitability of an annuity recommendation, a producer should consider the client's:
- In a QUALIFIED annuity funded entirely with pre-tax dollars, distributions are:
- A nonqualified annuity is funded with after-tax dollars, so at payout:
- Choosing a 'life with 10-year period certain' payout means the annuitant receives income for life, but if they die early, payments continue to a beneficiary:
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)