That is a great question! The answer depends upon the annuity itself, and how you structured it. ( Or will structure it, if you are thinking of buying one) Some annuities will be structured to pay out up to your death, and then cease payments. Whatever was left in that fund reverts back to the insurance company. Others will then make payments to your surviving spouse, and cease when they pass. You can also have one where the funds pass to a beneficiary, either in a lump sum, or in payments. There are a lot of options, and some will cost you extra. Please check with your advisor, or agent, and determine what is best for you. Thanks for asking!
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
During the accumulation phase all annuities provide a death benefit to the designated beneficiary. This is why it is very important to keep the beneficiary designations up to date. Once the annuity has started paying a monthly benefit there could be benefits to a second party depending upon the option selected by the owner. For example, many select a joint benefit with their spouse. In those cases the annuity would pay the full amount until the death of the first spouse and an adjusted amount during the balance of the life of the second spouse.
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
Annuities MAY pay out to a beneficiary under certain circumstances, but they do not have a "death benefit" in the sense that life insurance does. While life insurance is designed to pay a guaranteed benefit to the beneficiary upon the death of the insured, an annuity - fixed or variable - only pay what is remaining according to the structure of the annuity to the beneficiary upon the death of the annuitant.
So if the annuity is designated "Life Certain", payments end at the death of the annuitant and there is no beneficiary. If the annuity is designed as a "Period Certain" and the annuitant dies before the "Period" ends then the beneficiary will receive the remaining payments up to the end of the 'period'.
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So if the annuity is designated "Life Certain", payments end at the death of the annuitant and there is no beneficiary. If the annuity is designed as a "Period Certain" and the annuitant dies before the "Period" ends then the beneficiary will receive the remaining payments up to the end of the 'period'.