Annuity Protection Lump Sum

This option means that if the annuitant dies before their 75th birthday and they have not received income payments that equal (usually) the original purchase price, the balance can be paid as a lump sum on the member’s death.

This lump sum is called an annuity protection lump sum death benefit and is taxable at 35%.

The decision as to whether or not to include this protection must be made at the outset.

Although allowed by legislation, this option is not yet widely available from annuity providers. Costs are estimated at between 3% and 5% of initial annuity income.