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

Question 3

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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