With an annuity, you have to decide up front whether you want to build in death benefits. This affects the annuity income value payable to you (and might be lost if your spouse dies first, or you divorce).
With flexi-access drawdown, you don’t have to pre-select death benefits. You can nominate one or more beneficiaries to receive your fund normally free of inheritance tax on your death. They can take the fund as either a lump sum or as an income, free of tax if you die before age 75. On death after 75, any lump or income sum is normally taxed at your beneficiaries’ marginal rate.
The death benefits under flexi-access drawdown are considerably more flexible than under annuities allowing you to pass your fund to your loved ones and to future generations thus making this a potentially valuable family asset.