The Variable Annuity As a Death Benefit

Many people do not see the variable annuity or any other annuity as a good retirement investment. On the other hand, when used as a death benefit, the variable annuity appears more attractive.

It is advantageous that most variable annuities can be used as a death benefit. Maybe you do not plan to use these funds during your retirement. By naming a living beneficiary, your heir will avoid probate costs for this investment. However, there is a cost for this death benefit and this could include morality, separate accounts, and other administrative costs.

In many variable annuities, the death benefit is equal to the greater of the account value or the principal minus withdraws on the date of death. The death benefit of the variable annuity can take away some of your market fears, because your beneficiary would receive no less than your principal minus withdraws. Yet, carefully read the prospectus concerning the variable annuity before using it as death benefit.

*Disclaimer: This article does not constitute financial advice. Always consult a tax advisor or financial advisor when making investment decisions.