Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In an annuity contract, the role of the beneficiary is to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The beneficiary is the person designated to receive benefits on the death of the annuitant, typically the unpaid installments under options such as life with period certain or refund features. Unlike life insurance, where the death benefit is generally income-tax-free, annuity benefits paid to a beneficiary may be taxable to the extent they exceed the owner's cost basis.
Why the other options are wrong
- B) Premium payments are made by the owner, not the beneficiary, during the accumulation phase.
- C) The owner's successor or the contract terms handle owner death; the beneficiary does not automatically become owner.
- D) Subaccount selection in a variable annuity belongs to the owner, not to the beneficiary.
Memory hook
Beneficiary waits in the wings for leftover income if the annuitant exits early.