State RegulationsFL specificDifficulty 2/5
During the free-look period, a Florida owner returns a variable annuity whose market-value-adjusted cash value has fallen below the premium paid. What must the insurer refund under Fla. Stat. 626.99(4)(b),(c)?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Fla. Stat. 626.99(4)(b),(c), an annuity owner has 21 days to return the contract; a fixed annuity refund is the full premium including fees, but a variable or market-value-adjusted annuity refunds the cash surrender value plus fees. Because the market moved against this contract, the owner receives the lower cash surrender value plus fees, not the full premium originally paid.
Why the other options are wrong
- B) The full-premium refund is the fixed-annuity standard; variable and market-value-adjusted contracts are marked to their cash surrender value.
- C) The free look is unconditional as to its duration; only the refund basis differs for variable contracts.
- D) Fees alone are never the refund; the cash surrender value must be included for variable contracts.
Memory hook
Fixed refunds premium; variable refunds cash value, plus fees.