A guaranteed death benefit can be an invaluable insurance option for those concerned about the security of their retirement planning. Guaranteed death benefits provide peace of mind in knowing that, although an annuitant may have passed away, their investments or retirement funds will still be secure. The annuitant's beneficiary will receive an amount for the death benefit that is usually equal to, or greater than, what was invested in the annuity.

Guaranteed death benefits are designed to protect the beneficiary from the potential of a total loss of the invested funds if the annuitant dies prior to the beginning of benefit payments. The death benefit payout can be made in a number of ways; a lump sum payment, equal payments in installments, or used to purchase a life insurance policy on behalf of the beneficiary.

The amount payable to the beneficiary under a guaranteed death benefit is determined by the amount invested in the annuity. Many annuity contracts receive bonus payments upon the death of the annuitant which can increase the amount payable to the beneficiary. If the account has been in force for less than one year, the death benefit can be equal to the initial premium amount plus any premium load or commission paid.

If the annuity is held in an IRA, the death benefit can be paid in a lump sum to the beneficiary without penalty. However, with non-qualified annuities, the death benefit can be taxable to the beneficiary, based on the age of the deceased annuitant. Taking the time to fully explore all options is important when it comes to choosing the best annuity contract for your current needs.

For those who want to be sure their investments and retirement funds are protected, guaranteed death benefits can provide an extra layer of security. The guaranteed death benefit pays a specified sum of money to the beneficiary when the annuitant passes away, which keeps their investments safe regardless of when they die. All annuities come with a guaranteed death benefit, with different annuity contracts having different types and amounts available. Knowing what type of death benefit you have and understanding any potential tax or penalty on the deceasedannuitant's funds can help ensure that your investments are safe and secure.