Annuity Death Benefits


An annuity death benefit is the amount that is payable to the beneficiary when the annuitant passes away. It can also be referred to as "survivor benefits" when related to immediate or pension annuities. A survivor benefit may be a percentage of the annuitant's pension or immediate annuity payment; for example, a beneficiary may be entitled to 50% or 75% of the deceased annuitant's monthly pension. The size and structure of the payment is determined by the type and terms of the policy the annuitant held at the time of death.


The death benefit on most fixed deferred annuities is the full contract value - your premium, plus any accrued interest, calculated and compounded to the date of death. Some annuities also offer optional riders that increase the death benefit to an amount greater than the contract value at death. These optional riders typically require the payment of an annual fee expressed as a percentage of the contract value.


Variable Death Benefit
As it pertains to variable annuities, this is the amount paid to a beneficiary that is dependent on the investment performance of an insured's separate account. This amount is added to any guaranteed minimum death benefit.


Variable Annuities - Guaranteed Death Benefit
The beneficiary will receive a guaranteed death benefit if the annuitant dies before initiating lifetime annuity payments. The benefit received differs among companies and contracts, but is typically guaranteed to be an amount equal to what was originally invested or the value of the contract on the most recent policy anniversary statement, whichever is greater.


This benefit offers peach of mind to the annuitant 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% shortly before the annuitant's death, the beneficiary will still receive the full guaranteed amount dictated by the terms of the annuity and death benefit provision.