Tennessee Life Producer Practice Exam

If an annuitant dies before receiving the total value of their annuity, what will happen to the remaining amount?

1. The amount is forfeited

2. A beneficiary will receive payments until the contract value is met

3. The payments continue to the estate

4. Payments cease immediately

The correct answer is: A beneficiary will receive payments until the contract value is met

When an annuitant passes away before fully receiving the total value of their annuity, any remaining balance is typically transferred to a designated beneficiary. This ensures that the value accumulated in the annuity is not lost upon death and is instead distributed as per the terms of the contract. The beneficiary will receive payments that will continue until the total contract value has been disbursed. This feature provides a level of financial security and protection for the annuitant's beneficiaries, allowing them to receive the benefits that were intended for the annuitant. The structure of such annuities is designed to prevent forfeiture of funds and to extend the benefits to loved ones. This arrangement is in contrast to other options where funds might be lost or payments would stop entirely, which does not align with the purpose of ensuring that beneficiaries are supported financially after the annuitant's passing.