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L&HCaliforniamedium

California's Standard Nonforfeiture Law for Individual Deferred Annuities (Ins. Code §§ 10168.1+) primarily requires the contract to provide:

AA full return of every premium paid into the contract plus eight percent compounded interest, available to the owner at any time without charge
BA mandatory waiver of all surrender charges once the contract owner attains age fifty-nine and one-half, regardless of contract duration
CA penalty-free withdrawal of up to fifty percent of the accumulated account value in each and every contract year after issue
A guaranteed minimum nonforfeiture amount based on net considerations accumulated at a statutory minimum interest rate

Why this is the answer

For individual deferred annuities, the statutory floor is computed as net considerations (87.5% of the gross considerations credited each contract year, § 10168.25(c)(2)) accumulated at the nonforfeiture interest rate, less prior withdrawals, a $50 annual contract charge, premium tax and any indebtedness (§ 10168.25(c)(1)); surrender charges may reduce the cash paid, but not below that amount (§ 10168.4(c)). This guarantees a non-zero floor regardless of crediting strategy. Choice (a) overstates by promising full premium plus 8%. Choice (b) confuses the federal 10% IRS penalty rule (and CA 2.5% under Rev. & Tax. Code § 17085) with surrender charges. Choice (c) is not a statutory mandate.

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