Connecticut Life Producer Practice exam

What happens to the benefit if the annuitant dies during the accumulation period?

1. The estate receives nothing

2. Only the cash value is returned

3. The beneficiary gets the higher of amount paid or cash value

4. The insurance company retains the funds

The correct answer is: The beneficiary gets the higher of amount paid or cash value

When the annuitant dies during the accumulation period of an annuity, the beneficiary is entitled to receive a benefit that is determined by the higher of the total amount the annuitant has paid into the annuity or the current cash value of the annuity at the time of death. This provision is designed to protect the interests of the beneficiaries and ensure that they receive a payout that reflects the guaranteed minimum or the value of the account. Thus, if the annuitant has contributed a significant amount over time, and the cash value of the annuity is lower than the total contributions made, the beneficiaries will receive the full amount paid into the annuity. On the other hand, if the cash value is higher, then the beneficiaries will receive that amount. Overall, this provision provides a measure of financial security for the beneficiaries and reflects the core purpose of annuities, which is to provide a stream of income while also safeguarding the invested capital.