Certified Financial Consultant (CFC) Practice Exam

The cash value of an annuity is designed to provide financial support to the annuitant or their chosen beneficiary. If the owner of an annuity passes away before making withdrawals, the cash value is not lost, nor does it remain with the insurance company or go to the federal government. Instead, it is passed on to the beneficiary designated in the annuity contract.

This transfer of cash value ensures that the intended recipient can benefit from the financial asset, allowing them to access the funds either as a lump sum or through annuitized payments, depending on the terms of the contract. This mechanism forms an essential part of estate planning, providing peace of mind that the financial legacy will support loved ones in the event of the owner's death.

In summary, upon the owner's death, the cash value of the annuity flows directly to the named beneficiary, ensuring its purpose as a supportive financial resource continues.