Washington Life Producer Practice Exam

If the annuitant dies before the annuity start date, what happens to the premiums paid?

1. They are forfeited

2. They become part of the insurance company's revenue

3. They are returned to the annuitant's estate

4. They are given to the beneficiary along with interest earned

The correct answer is: They are given to the beneficiary along with interest earned

When the annuitant dies before the start date of the annuity, the premiums paid generally are returned to the beneficiary along with any interest that may have been accrued during the accumulation period. This is a standard feature of many annuity contracts designed to protect the interests of the annuitant and their beneficiaries. This provision ensures that the investment made into the annuity is not lost if the annuitant passes away prior to receiving any benefits from the annuity. Returning these funds with interest acknowledges that the money has been held by the insurance company, and it compensates the beneficiary for the time the premiums were in the insurer's control. In doing so, it aligns with the principle of providing financial security and value to the beneficiary in the event of the annuitant’s premature death.