SIE practice questionmediumVariable Annuities — Death Benefit
If a variable annuity owner dies during the accumulation phase, the beneficiary typically receives:
- AThe greater of the account value or the total premiums paid (less prior withdrawals)✓ Correct answer
- BThe annuity must be continued by the beneficiary with no payout option
- COnly the original premium paid, regardless of account performance
- DNothing — the contract terminates with no payout
Explanation
Why A — The greater of the account value or the total premiums paid (less prior withdrawals)
The standard death benefit guarantees the beneficiary receives the greater of the current account value OR the total premiums paid (minus any prior withdrawals). This protects against market losses — even if the account has lost value, the beneficiary gets back at least what was invested. Some contracts offer enhanced death benefits for an additional charge.
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