What does the death benefit in an annuity ensure for beneficiaries?

The death benefit in an annuity provides a lump-sum payment to the beneficiaries upon the death of the annuitant. This feature ensures that the value accumulated in the annuity is transferred to the chosen beneficiaries rather than being lost upon the annuitant’s death. The death benefit serves as a safety net, assuring that beneficiaries receive a financial legacy or support, thus ensuring that the annuitant's investment benefits their loved ones.

While other options may describe potential benefits that can be associated with retirement or payout structures, they do not accurately reflect the primary function of the death benefit in this context. For instance, providing a guaranteed monthly stipend or continued growth of the annuity’s value upon death does not align with the specific nature of death benefits, which are designed to provide a payment to beneficiaries right away, rather than ongoing payments or investment growth after the annuitant’s passing.