Utah Life Producer Practice Exam

The primary purpose of a surrender value in a deferred annuity is to allow for early withdrawal of funds. Surrender value represents the amount the policyholder is entitled to receive from the insurance company if they decide to withdraw their money from the annuity before the contract matures or before the annuity starts paying out income. This feature provides some liquidity to the policyholder, enabling them to access a portion of their investment in cases of emergency or urgent financial need.

While the other aspects mentioned in the options do relate to annuities, they do not accurately capture the main function of surrender value. For example, providing lifetime income pertains more to the payout phase of the annuity and is not related to the concept of surrender value. Ensuring minimum investment gains is often addressed through the investment options available within the annuity but isn't intrinsic to the surrender value itself. Covering administrative expenses is an important operational aspect for insurance companies, but it does not reflect the purpose of the surrender value in a deferred annuity.