How are death benefits on fixed annuities typically described?

Death benefits on fixed annuities are typically described as paying no less than 100% of the purchase payments during the accumulation period. This means that if the annuitant passes away before the annuity starts making payments, the designated beneficiary will receive a minimum benefit that equals the total amount contributed to the annuity, effectively ensuring that the initial investment is preserved and passed on to the beneficiary. This feature provides a level of financial security, ensuring that the funds are not lost and are instead directed to the intended heirs.

The mechanics of fixed annuities are designed to protect the annuitant’s contributions, emphasizing this guaranteed payout in the context of death benefits, which reassures clients who prioritize the safety of their investments over time. This strong guarantee is an attractive aspect of fixed annuities and helps them serve as a tool for wealth transfer in estate planning.