What is a death benefit in relation to annuities?

A death benefit in relation to annuities refers to the amount that is paid out to a beneficiary upon the death of the annuitant. This feature serves as a form of life insurance provided within the annuity contract, ensuring that the financial investment of the annuitant can provide for their loved ones in the event of their passing.

When an annuitant dies, the designated beneficiary receives the death benefit, which can be either the total value of the annuity at that time or a predetermined amount, depending on the specific terms of the annuity contract. This benefit provides peace of mind, knowing that the funds can help cover expenses or provide financial support to those left behind.

Other options do not accurately describe the death benefit. For instance, the payment to a creditor upon the annuitant's death concerns debts rather than benefits provided under the terms of an annuity. Early withdrawal fees relate to penalties for accessing funds prematurely, which is distinct from the concept of a death benefit. Lastly, while engaging retirees to invest could be a goal of annuity products, it does not define the nature of the death benefit itself. Thus, the description of the death benefit aligns correctly with what is provided to the beneficiary.