Question 82

The nonforfeiture value of an annuity is all premiums paid, plus interest, minus any withdrawals and surrender charges.

The nonforfeiture value of an annuity is calculated as all premiums paid into the account, along with interest accrued, reduced by any withdrawals made and any applicable surrender charges.

A) Only premiums vested in the account for three years prior to withdrawal

This option is incorrect because the nonforfeiture value does not limit the calculation to only those premiums vested for three years. It considers all premiums paid, not just those within a specific time frame.

B) All premiums paid

While this option includes all premiums paid, it is incomplete as it does not account for the interest accrued or any deductions for withdrawals and surrender charges. Therefore, it does not accurately reflect the total nonforfeiture value.

C) Total accumulation of cash growth value

This choice is misleading because it suggests that the nonforfeiture value is solely based on the cash growth, ignoring the need to consider all premiums paid and the deductions for withdrawals and charges. Thus, it does not represent the complete calculation of nonforfeiture value.

D) All premiums paid, plus interest, minus any withdrawals and surrender charges

This option correctly outlines how the nonforfeiture value is determined. It encompasses all premiums paid, includes interest earned, and appropriately deducts any withdrawals and surrender charges, making it the accurate answer.

Conclusion

The correct answer, option D, provides a comprehensive view of the nonforfeiture value calculation, incorporating all necessary components such as total premiums, interest, and deductions. The other options fail to fully address this calculation, leading to incomplete or incorrect interpretations of the nonforfeiture value.