Question

Under what circumstances might a contract owner terminate an annuity before the income period begins?

1.Change in financial circumstances or needs requiring immediate funds.
2.Discovering more beneficial investment opportunities elsewhere.
3.Dissatisfaction with the terms or performance of the annuity.
4.An increase in the annuity's value prompting an early withdrawal.

Answer 1

A contract owner can terminate an annuity before the income period starts due to change in financial circumstances, finding better investment opportunities, or dissatisfaction with the terms or performance of the annuity.

Step-by-step explanation:

Before the income period begins, there are several circumstances under which a contract owner might terminate an annuity:

1. Change in financial circumstances or needs requiring immediate funds: If the contract owner faces financial difficulties or an urgent need for funds, they may choose to terminate the annuity to access the money.
2. Discovering more beneficial investment opportunities elsewhere: If the contract owner finds investment options that offer better returns or suit their financial goals more effectively, they may decide to terminate the annuity and invest elsewhere.
3. Dissatisfaction with the terms or performance of the annuity: If the contract owner is dissatisfied with the terms or performance of the annuity, they may opt to terminate it before the income period begins.

It is important to consider any penalties or fees that may be associated with terminating an annuity early.