Question ID: $543949$

Question #$44$ of $50$

Payments from the insurance company to the annuitant are taxable in whole or in part. What is the best way to describe to your clients the taxation of annuity death benefits?

A$)$ Annuity death benefits are taxable to the beneficiary only if the beneficiary is the annuitant's spouse.

B$)$ Like life insurance proceeds, annuity death benefits are paid entirely tax free to the beneficiary.

C$)$ Annuity death benefits, including cost basis in the contract, are taxable to the decedent's estate.

D$)$ Annuity death benefits are taxable to the beneficiary to the extent they exceed the cost basis in the contract.