Which feature guarantees that the payout will be at least the higher of the separate account balance or the sum of the purchase payments if death occurs during accumulation?

Which feature guarantees that the payout will be at least the higher of the separate account balance or the sum of the purchase payments if death occurs during accumulation?

• A. Surrender Charge
• B. Rider Benefit
• C. Death Benefit Guarantee
• D. Administrative Charge

Answer: (C)

Death benefit guarantee is a protection built into many variable annuities that ensures a minimum payout to beneficiaries if the owner dies during the accumulation phase. Specifically, it guarantees that the payout will be at least the higher of the separate account value or the total of all purchase payments made. This means the beneficiary won’t receive less than the amount originally contributed, even if the market value has fallen. If the account value ends up higher than the total premiums paid, the payout will be that higher amount instead. For example, if you’ve contributed 100,000 in premiums but the account value drops to 60,000, the beneficiary would still receive at least 100,000. If the account value is 120,000 at death, the payout would be 120,000. This feature protects the principal and provides a floor on the death benefit. Surrender charges are withdrawal penalties, not guarantees of a death payout. Administrative charges cover ongoing costs and do not affect the guaranteed minimum payout. A rider benefit is a broad term for optional features, but the specific protection described is the death benefit guarantee.

Death benefit guarantee is a protection built into many variable annuities that ensures a minimum payout to beneficiaries if the owner dies during the accumulation phase. Specifically, it guarantees that the payout will be at least the higher of the separate account value or the total of all purchase payments made. This means the beneficiary won’t receive less than the amount originally contributed, even if the market value has fallen. If the account value ends up higher than the total premiums paid, the payout will be that higher amount instead.

For example, if you’ve contributed 100,000 in premiums but the account value drops to 60,000, the beneficiary would still receive at least 100,000. If the account value is 120,000 at death, the payout would be 120,000. This feature protects the principal and provides a floor on the death benefit.

Surrender charges are withdrawal penalties, not guarantees of a death payout. Administrative charges cover ongoing costs and do not affect the guaranteed minimum payout. A rider benefit is a broad term for optional features, but the specific protection described is the death benefit guarantee.