If the annuitant dies before the maturity date, the insurer pays the beneficiary the higher of (a) the market value of the fund at the date of death, or (b) the guaranteed minimum percentage of net premiums.
The death benefit guarantee protects beneficiaries from market downturns. If the annuitant invested $100,000 in a contract with a 100% death benefit guarantee and the fund value has fallen to $60,000 at death, the beneficiary receives $100,000, not $60,000.
Key rule: The death benefit guarantee is linked to the annuitant's life. If the owner and annuitant are different people and the owner dies first, the death benefit is not triggered. Only the annuitant's death triggers the death benefit.