South Carolina Life Insurance Practice Exam

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

1. Life insurance provider

2. Annuitant's estate

3. State government

4. Beneficiary in the will

The correct answer is: Annuitant's estate

When there is no named beneficiary for an annuity, the benefits are paid to the annuitant's estate. This is because, in the absence of a designated beneficiary, the funds become part of the annuitant's overall estate. From there, the distribution is governed by the terms of the estate according to state law and the decedent's will, if applicable. In this case, the estate acts as the next entity in line to receive any remaining funds, ensuring that the assets are ultimately transferred according to the decedent's wishes outlined in their estate plan or will. This systematic approach serves to manage the distribution of assets after death, complying with legal requirements and the principles of probate. The other options do not correctly address the flow of benefits when there is no named beneficiary. For example, the life insurance provider is not a recipient of the funds unless specified by a beneficiary designation. The state government typically does not claim benefits from an annuity unless it is escheated due to a lack of claimants after a certain period. Lastly, a beneficiary in the will cannot claim the benefits unless they were specifically named prior to the annuitant’s death. Thus, the correct answer reflects the legal standard regarding handling benefits in the absence