In what way can living benefit riders add value to annuities?

Living benefit riders enhance the value of annuities by guaranteeing certain income levels regardless of the performance of the underlying investments. This feature provides a degree of financial security, as it ensures that the annuitant will receive a predetermined income stream even if the market experiences downturns.

This guarantee can be particularly attractive in volatile markets, where investment returns are uncertain. Such riders may include options like guaranteed minimum withdrawal benefits or guaranteed lifetime withdrawal benefits, which help protect investors' income from market fluctuations and offer peace of mind.

The other options do not accurately reflect the primary advantage of living benefit riders in annuities. While investment losses can be a concern, living benefit riders focus on income stability rather than directly decreasing investment risk. Refund of fees and tax obligations are also separate considerations that do not relate specifically to the core benefit that living benefit riders provide.