What happens to the annuity income when the annuitant dies in an insured annuity?

In the context of an insured annuity, when the annuitant dies, the income from the annuity ceases, but a death benefit is paid out. This structure ties the income of the annuity to the life of the annuitant, meaning that once they pass away, the guaranteed income stream stops. However, the insured annuity typically comes with a death benefit, which is often a predetermined amount that is paid to the beneficiaries or heirs of the annuitant.

This mechanism is designed to provide financial security to beneficiaries, ensuring they receive a form of payout after the annuitant's death, even though the regular income payments had ended. The death benefit can help cover final expenses, other financial obligations, or even serve as an inheritance.

In contrast, the other choices suggest scenarios that do not align with how insured annuities work. For example, the income cannot continue to beneficiaries after the annuitant's death, as it is directly tied to the life of the annuitant. Similarly, the income isn't set aside for tax purposes since the annuity's death benefit typically represents a tax-free payout to the beneficiaries, and it certainly isn't forfeited in the sense that the value is lost; rather, the death benefit