What are living benefits in the context of annuities?

Living benefits in the context of annuities refer to features or options that provide additional income or choices for the annuitant while they are still alive. These benefits are designed to enhance the utility of the annuity by allowing the annuitant to access funds or receive income under specific circumstances, such as a sudden need for cash due to unforeseen financial obligations or health issues.

Living benefits can include features like long-term care riders, which facilitate the use of annuity funds for medical care, or withdrawal privileges that allow the annuitant to take out a portion of their investment without incurring penalties under certain conditions. This flexibility can significantly enhance the value of an annuity, making it a more attractive option for individuals seeking both security in retirement and the ability to respond to changing life situations.

In contrast, the other options describe concepts that don't align with the definition of living benefits. Options discussing death benefits pertain to coverage provided after the annuitant passes away, while options regarding premium returns focus on guarantees related to the initial investment without addressing ongoing benefits during the annuitant's lifetime. Thus, the essence of living benefits lies in their focus on providing support and additional choices while the annuitant is alive.