If an annuity is terminated prior to the beginning of the income payment period, what does the contract owner receive?

When an annuity contract is terminated before the income payment period begins, the contract owner typically receives the contract surrender value at that time. The surrender value refers to the amount of money that the insurer will pay to the contract owner if they decide to terminate the contract before the stipulated income payments begin. This value may include any accumulated interest or gains, but it can also reflect deductions due to early termination penalties or fees, which are often detailed in the contract.

This payment is important because it allows the contract owner to recoup some of their investment in the annuity, even though they will not receive the full amount of premiums paid, which may not represent the total value available for surrender. The other choices, such as receiving no refund or all premiums paid, do not align with standard practices regarding annuities, where the surrender value is calculated based on the specific terms within the contract. Furthermore, reimbursement for expenses deducted from the contract value is not a typical provision for terminated annuities, as those deductions usually impact the overall surrender value rather than being refunded separately.