State RegulationsPA specificDifficulty 2/5
A client has been contributing to a deferred annuity for years and now elects to start receiving monthly income. What has just occurred?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Electing to receive income is the moment a deferred annuity crosses from the accumulation period into the annuity period, the payout phase of the contract under Pennsylvania's annuity framework administered by the Pennsylvania Insurance Department. The fund that was built during accumulation is now being liquidated through periodic payments. Nothing about the election changes the accumulation history — it changes which phase the contract is in.
Why the other options are wrong
- A) The movement runs the other way; income payments mark the end of accumulation, not its beginning.
- B) Starting income does not erase surrender charges or refund premiums; the fund is simply switched to payout mode.
- C) The beneficiary and annuitant roles are fixed by contract designations, not reversed by starting income payments.
Memory hook
First check to the annuitant = accumulation over, annuity period begun.