Do All Annuities Have A Death Benefit?
No, not all annuities have a death benefit. Specifically, if someone purchases a Single Premium Immediate Annuity (SPIA) with a single-life or joint and survivor payout option or annuitizes their contract with these options, there will be no death benefit. This means that once the annuitant (or the last survivor in a joint and survivor annuity) passes away, the payments stop, and no further benefits are paid.
On the other hand, if an annuity includes a guaranteed lifetime income rider, it can provide a death benefit. This is applicable in any payout option as long as there is still money in the annuity’s account. It’s important not to confuse these two different scenarios.
Understanding Annuities and Death Benefits
Single or Joint and Survivor SPIA:
- Single-Life: Payments cease upon the death of the annuitant.
- Joint and Survivor: Payments continue until the death of the last survivor.
Annuities with Guaranteed Lifetime Income Rider
- Any Payout Option: Provides a death benefit if funds remain in the account.
It’s crucial for individuals considering an annuity to understand these differences to ensure that their financial goals and the needs of their beneficiaries are met.
Conclusion
Understanding the specifics of annuity death benefits is key to making informed financial decisions. Not all annuities offer a death benefit, especially in the case of certain SPIA options. Choosing the right type of annuity and understanding the terms of additional riders, like a guaranteed lifetime income rider, can ensure that your financial objectives are achieved. Contact us today for a free quote.
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