Question

allotted time: 75 minutes
the timer provided does not submit or log a student out when it reaches zero. this is simply a tool to help students understand the time limitations for our certification exam and the provincial exams.
note: you must complete this exam in order to attempt it again.
4 milo purchased an immediate annuity contract last month and he received his first payment five days ago. he is facing financial difficulty, so he contacts his agent to surrender his contract and receive a refund as a lump - sum. which of the following responses is the agent most likely to provide?
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a. milo will have to wait until the contracts anniversary date to be able to surrender the policy and get a refund.
b. as it is an immediate annuity contract and payments have begun, milo will not be permitted to surrender the contract.
c. milo can receive a refund if he submits an application to surrender within 30 days of receiving his first payment.
d. as the annuity contract has been in effect for less than three months, milo can surrender the contract anytime and get a refund within 15 days.
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Explanation:

Immediate annuity contracts, once payments begin (as Milo received his first payment), typically do not allow surrender for a refund. Option a is incorrect as there's no such rule about waiting for the anniversary. Option c's 30 - day surrender window isn't a standard rule for immediate annuities with started payments. Option d's "less than three months" and 15 - day refund is also not a standard rule. So, when payments have begun in an immediate annuity, surrender for a refund is not permitted.

Answer:

b. As it is an immediate annuity contract and payments have begun, Milo will not be permitted to surrender the contract.