Many annuities come with additional features. Some of these are included at no extra cost, while others require an additional premium. A common feature is a death benefit, which ensures that if the annuitant passes away before receiving all their contributions back, the remaining funds are paid to a named beneficiary. This death benefit can be taken as a single lump sum or as a stream of payments. However, unlike life insurance death benefits, annuity death benefits are typically taxable.
Another feature found in many annuities is a terminal illness or nursing home waiver. These waivers allow the annuitant to access funds from the annuity penalty-free if they are diagnosed with a terminal illness or need to reside in a nursing home for a certain period of time.