Annuitant vs. beneficiary, what’s the difference? This is a question many people are asking themselves and a topic discussed in the annuity community for years. This guide will discuss some critical differences between annuitants and beneficiaries to help determine which one you should be!
The Annuity Contract Setup
An annuity is a contract between a consumer and an insurance company. The annuity contract has three designated representatives of the contract:
- The contract owner
- The annuitant
- The beneficiary
What is an Annuitant?
An annuity is an insurance policy for retirement.
Most of the time, the annuitant is also the contract owner, but they can be different. For example, the contract owner, such as the beneficiaries, decides about the annuity. If the annuitant is different from the contract owner, the annuitant can not decide about the annuity contract.
What is a Beneficiary?
The beneficiary is the person who received the annuity’s death benefit. Naming one or more beneficiaries other than the estate is vital because, without a beneficiary, the money in the annuity could be subject to probate.
Joint Annuitant Vs Beneficiary
A joint annuitant, typically a spouse, continues to receive annuity payments after the primary annuitant’s death. A beneficiary inherits assets or benefits but doesn’t necessarily receive annuity payments. Joint annuitants often receive lifetime payments, while beneficiaries receive remaining assets or benefits according to the contract or will.
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Annuitants and beneficiaries are essential players in the annuity world but have different roles. If you’re trying to decide which one you should be or want more information on this topic, contact us for a quote. We can help you understand the differences between these two roles and how they might impact your financial future. Thanks for reading!
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Frequently Asked Questions
Does an annuity have a beneficiary?
Yes, an annuity can have a beneficiary who will receive the annuity payments after the annuitant’s death. The process can vary by type of annuity, and the annuitant can set the beneficiary when they purchase the annuity.
What is an annuitant in life insurance?
An annuitant is an individual who receives payments from an insurance company or other financial institution. Annuitants typically receive these payments in exchange for a lump sum premium, although other payment options may be available. In addition, these payments may be for a specific period or life, depending on the type of annuity purchased.
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- Annuities that offer a Death Benefit to Beneficiaries
- How To Avoid Paying Taxes On An Inheritance
- The Best Annuity Death Benefits
- What is Spousal Continuance?
- How to Retire on $200,000 Inheritance
- What is an Annuitant
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