Variable Annuity Death Benefits
August 5, 2020 by Wade Pfau
The standard death benefit for a deferred variable annuity is the greater of the contract value of any remaining assets at death, or the total premiums paid less distributions received by death. It is provided to the beneficiary.
In addition to optional withdrawal benefit riders (also called living benefits), many deferred variable annuities also offer optional death benefit riders that create an opportunity for more than the standard death benefit. One should look carefully at these as they could be counterproductive for those focusing on getting the most guaranteed income from their variable annuity. For instance, a common death benefit rider could support a death benefit equal to the full value of the annuity premiums if at least one dollar remains in the contract by an advanced age. One must consider whether it is a wise choice if the focus is otherwise placed on maximizing the spending power afforded by an income guarantee.
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