Death Benefit


Death benefit is defined as the amount on a life insurance policy or pension that is payable to the beneficiary when the annuitant passes away. It is also known as "survivor benefit". A death benefit may be a percentage of the annuitant's pension. For example, a beneficiary might be entitled to 65% of the annuitant's monthly pension. Alternatively, the benefit may be a large lump-sum payment from a life insurance policy. The size and structure of the payment is determined by the type of policy the annuitant held at the time of death.


The death benefit on most fixed deferred annuities is the full contract value, i.e., your premium plus accrued interest compounded annually and credited daily minus any prior withdrawals, calculated as of the date of death. There are two types of death benefits one is variable death benefit another one is guaranteed death benefit.


Variable Death Benefit
The amount paid to a decedent's beneficiary that is dependent on the investment performance of an insurance company's separate account. The amount is added to any guaranteed minimum death benefit.


Guaranteed death benefit
A benefit term that guarantees that the beneficiary, as named in the contract, will receive a death benefit if the annuitant dies before the annuity begins paying benefits. The benefit received differs among companies and contracts, but the beneficiary is guaranteed an amount equal to what was invested or the value of the contract on the most recent policy anniversary statement, whichever is higher.


This benefit gives the annuitant peace of mind by guaranteeing that his or her beneficiary will be protected from down markets and decreases in account value. For example, if there is an economic downturn and the overall market falls by 20% when the annuitant dies, the beneficiary will still receive the full guaranteed amount as dictated by the terms of the annuity and death benefit.