What happens to the benefits of an immediate annuity if the annuitant dies shortly after purchasing it?

In the case of an immediate annuity, benefits are paid out to the annuitant right away, typically within a month of purchase, and are based on the investment made. If the annuitant dies shortly after purchasing the annuity, the specific terms of the annuity contract will dictate what happens to the remaining benefits.

Generally, immediate annuities do not provide a death benefit unless a particular option, such as a refund or period certain option, has been selected. In the absence of such features, when death occurs shortly after purchasing the annuity, any remaining payments typically go back to the insurance company. This means that the benefits are effectively forfeited because there’s no provision to pay out money to the estate or beneficiaries unless specified in the contract.

This understanding emphasizes the nature of immediate annuities, which is designed primarily as a mechanism to provide income to the annuitant during their lifetime, with little to no additional benefits after their death unless additional features are added.