@dmertz - I'm specifically looking for a way to DISPUTE the FMV provided by the insurance company. It is my belief that they are using a very low discount rate. I also believe there could be an alternative method that would produce a reasonable value that is defensible with the IRS. Here's a paragraph and link to an article from Michael Kitces:
"RMD must be based on the “entire interest” under the annuity contract, which includes both the account balance, and the “actuarial present value” of additional benefits and guarantees. Thus, for instance, if an annuity had a $100,000 cash value but a $300,000 death benefit, then the value of the annuity would be $100,000 of cash plus the actuarial value of the extra $200,000 death benefit based on the annuity owner’s age (in essence, $100,000 plus the cost of $200,000 term insurance for that year for someone of comparable age)." https://www.kitces.com/blog/required-minimum-distribution-rmd-calculation-tax-rules-ira-401k-403b/ (note: he too references the same Q&A 12 in his article)
Also of note: there is a second contract that has a similar situation and the FMV on it from a different company is DRAMATICALLY lower.
And yes, the death benefit would disappear if annuitized.
