If an annuity shows that the annuitant dies before the start date, what is paid to the beneficiary?

• A. The premiums paid only
• B. The premiums paid plus interest earned
• C. The face amount of the policy
• D. No benefit is paid

Answer: (B)

When a deferred annuity is in the accumulation phase and the annuitant dies before the start (annuitization) date, the contract typically pays the beneficiary the amount accumulated in the contract. This is the premiums paid plus the interest (or credited earnings) that have accrued on those premiums. The idea is to recover the owner’s investment and any growth, rather than providing a separate life-insurance-style death benefit. So the beneficiary receives the account value, not just the premiums, nor a policy face amount, and certainly not nothing.