Pennsylvania Life and Health Insurance Exam Practice Question
An annuitant dies during the accumulation period. What happens to the cash in the annuity?
Correct Answer: B
Rationale: When an annuitant dies during the accumulation period, the cash value in the annuity is typically paid to the designated beneficiary. This ensures that the funds are transferred according to the annuitant's wishes.
Option A is incorrect as the IRS does not automatically receive the funds; taxes may apply but are not deducted directly from the payout. Option C is also wrong; the insurance company does not retain the funds unless there are no designated beneficiaries. Lastly, option D is misleading; while the cash may enter the estate if no beneficiary is named, it primarily goes to the beneficiary if one exists.
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