Ace Your Financial Future: Conquer the 2026 QFA Pensions Exam 2 with Confidence!

The central idea is how a pension death benefit is distributed who receives it and whether it stays outside or goes through the estate. If you name a beneficiary, the death benefit generally goes straight to that person, outside the estate, often avoiding probate and potential estate taxes and delays. But if no beneficiary is nominated, the benefit becomes part of your estate. It then passes according to your will or, if you don’t have one, under intestacy rules, and it will go through probate where it can be subject to taxes and administration costs.

That’s why the correct understanding is that, without a beneficiary nomination, death benefits may pass to the estate and be subject to probate and taxes. The other statements don’t fit because death benefits aren’t restricted to plan termination to be paid, aren’t guaranteed tax-free regardless of nomination, and aren’t universally paid only to dependents with no route to the estate.