Insurers Have Greater Administrative Charges for Flexible-Premium Deferred Annuities (FPDAs)

question 37

Multiple Choice

Insurers have greater administrative charges for flexible-premium deferred annuities (FPDAs) than they do for single-premium deferred annuities (SPDAs) because:

• A) they do not have minimum required deposits for FPDAs
• B) there is considerably more adverse selection among persons purchasing FPDAs
• C) FPDA purchasers have much greater flexibility in making premium payments
• D) This is a trick question; insurers do not impose higher administrative charges on FPDAs versus SPDAs

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