What is the primary purpose of a death benefit in annuities?

The primary purpose of a death benefit in annuities is to provide financial security for beneficiaries. This feature ensures that in the event of the annuitant's death before receiving the full value of the annuity, the designated beneficiaries will receive a benefit that can help support them financially. The death benefit acts as a safety net, guaranteeing that the investment made into the annuity is not lost and can be passed on to loved ones. This aspect of annuities is particularly important for individuals who want to ensure that their beneficiaries are taken care of after their passing, making it a critical component of estate planning.

The other options focus on aspects that do not directly relate to the core function of the death benefit. For instance, while encouraging investment in high-risk assets might be an objective of some investment products, it does not pertain to the purpose of a death benefit. Similarly, increasing the annuitant's contributions is unrelated to the beneficiary-focused nature of the death benefit. Lastly, covering administrative costs during the annuitant's life pertains to the operational aspects of managing the annuity rather than the benefits provided to heirs. Thus, the focus on financial security in the context of beneficiaries is what defines the primary purpose of the death benefit.