Fixed and Fixed Indexed Annuities paying “lifetime income” benefits generally do not provide an inheritance unless they specifically specify otherwise. In the cases where they do provide an inheritance, there is a guarantee of a minimum number of payments. Any payments that are not distributed to you below the minimum before you die, will go your heirs.
Variable Annuities will always provide for inheritance unless the value of the annuity is zero. As you start receiving payments from a variable annuity, you lower the value of the annuity by the amount you withdraw. If the annuity has no value, there will be nothing for your heirs to inherit.
With a fixed deferred annuity, the answer is very simple. The present value of the annuity. However, the answer becomes more complicated with index and variable annuities. Here are some of the major type of annuity death benefits with these types of annuities.
A beneficiary may have different options for accepting a death benefit. These options include payment of a lump sum, regular income payments, deferral of receiving the death benefit, or taking over ownership of the annuity contract (for example, as a spouse).
This lesson is part of our Free Guide to Investing in Annuities. Continue to the next lesson here.
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