When the holder of an annuity dies, the treatment of the annuity depends on the specific terms and conditions of the annuity contract. In many cases, the remaining balance of the annuity may be paid out to a designated beneficiary or beneficiaries. This payout can be made in a lump sum or in the form of ongoing payments, depending on the options chosen at the time of purchase. It's important to note that the tax implications of the annuity payout after the holder's death can vary based on factors such as the type of annuity, the age of the holder at the time of death, and the beneficiary's relationship to the deceased. It's advisable to consult with a financial advisor or tax professional to understand the specific implications in a given situation. Additionally, some annuity contracts may offer optional riders or features that provide benefits in the event of the holder's death, such as a guaranteed minimum payout period or a death benefit for the beneficiary. These features can offer added protection and financial security for the beneficiary. Overall, the treatment of an annuity after the holder's death is governed by the terms of the contract and any optional features selected, so it's important for annuity holders to review and understand these details when considering an annuity purchase.