What provision allows surrender charge-free withdrawals in deferred annuities when interest rates fall?

The bailout provision is designed to protect annuity holders from the adverse effects of falling interest rates. When interest rates decline, the rate of return on a deferred annuity may become less favorable compared to other investment options. This provision enables policyholders to withdraw funds from their annuity without incurring surrender charges, which are typically applied to withdrawals within a specific period after purchase. By allowing withdrawals during periods of declining rates, the bailout provision provides flexibility and helps ensure that investors do not feel trapped in an underperforming product.

The other options represent different types of provisions found in annuity contracts. The surrender provision generally refers to the terms under which an investor can withdraw funds but typically includes penalties during the surrender period. The release provision is not a recognized term in this context. The non-forfeiture provision generally refers to the rights of an annuity holder concerning the cash value of the contract if they stop making payments, ensuring that some value can be retained.