Question

Ten years ago, John purchased a deferred annuity and named his daughter, Suzanne, as beneficiary. Over the years, John invested $50,000 in the contract; upon his death, the contract was valued at $118,000. Assuming that John died without annuitizing and the contract contained the standard death benefit provision, how much will Suzanne receive?a. $50,000b. $68,000c. $118,000d. $57,000

Answer 1

Answer:

The answer is a. $50,000

Explanation:

Deferred annuity is a form of investment where principal is invested, and no immediate income payments are made till all contributions are completed. Then the payouts can start.

In this case John died without annuitizing (the contributions were not completed).

Standard death benefit guarantees only the principal that was paid into the investment.

So Suzanne will receive the $50,000 that was paid in as premium by John.

Answer 2

Answer:

c. $118,000

Explanation:

In Deferred Annuity, with death benefits to beneficiary, all the benefits will be transferred upon the death of the purchaser i.e. on the value of the contract  at the time of the death .