Minnesota Life Insurance License Practice Exam

The non-forfeiture value of an annuity represents the amount an annuity holder would receive if they decided to surrender the annuity before its maturity. This value is critical because it ensures that the policyholder does not lose all their investment if they need to exit the contract early.

The correct choice indicates that the non-forfeiture value is based on all the premiums paid into the annuity, with consideration given to any withdrawals made from it. This accurately reflects that the non-forfeiture value includes both the contributions of the policyholder and any adjustments for withdrawals. By including this information, it captures the full investment that a policyholder has in the annuity, minus any amounts they have taken out.

In contrast, other choices do not capture this comprehensive sense of an annuity's non-forfeiture value. For instance, stating the face value of the annuity does not consider actual contributions and withdrawals, thereby failing to provide an accurate representation of what the policyholder would receive. Similarly, an option that refers to just all premiums paid less any withdrawals would omit important context on the policyholder's complete financial situation, while simply listing the current account value does not necessarily reflect the historical contributions and adjustments made, which might not be up-to-date