AD Banker Comprehensive Practice Exam

If an annuitant dies shortly after receiving payments from a temporary annuity certain, what happens to remaining funds?

1. Subject to probate

2. Paid for beneficiary's entire life

3. Paid to beneficiary for the remaining certain period

4. Placed into an insurance trust account

The correct answer is: Paid to beneficiary for the remaining certain period

A temporary annuity certain provides payments for a specified period, regardless of whether the annuitant is alive or deceased during that time. If the annuitant dies soon after receiving payments, the contract specifies that any remaining funds due for the duration of the certain term will be paid to the named beneficiary. This ensures that the financial commitment made by the annuity is honored for the established payment period. The funds are not subjected to probate because they are passed directly to the beneficiary outside of the annuitant's estate. Additionally, the beneficiary does not receive payments for their entire life, as the arrangement is limited to the remaining periods of the annuity. The funds are not put into an insurance trust account, as the annuity's terms dictate direct payment to the beneficiary until the end of the determined term. Thus, the correct outcome is that the remaining payments are made to the beneficiary for the duration of the certain period.