Owner-Driven Annuity Contract Vs. Annuitant-Driven Annuity Contract

Shawn Plummer

CEO, The Annuity Expert

There are two types of annuity contracts. They are owner-driven annuities and annuitant-driven annuity contracts. This guide will compare owner-driven annuities vs. annuitant-driven annuity contracts to see which one is more beneficial for the individual owner or the insurance company offering them.

The Annuity Contract

There are three parts to an annuity contract: the contract owner, annuitant, and beneficiary.

  • Contract Owner: The contract owner is the owner of the annuity. The owner is funding the annuity, can change the beneficiary, make withdrawals, pay the premiums, surrender the contract, and make any changes before annuitizing the contract. The contract owner can be a person or an entity, such as a trust or charity.
  • The Annuitant: The annuitant is insured and has to be a person, not an entity. The annuitant can be different than the contract owner, but in most cases, both are the same. Any payments are based on the annuitant’s life expectancy.
  • The Beneficiary: The beneficiary is the designated recipient of the annuity’s death benefit. The beneficiary can be either a person or an entity.

What’s the difference between an owner-driven annuity contract and an annuitant-driven annuity contract?

The main difference between an owner-driven annuity contract and an annuitant-driven one is that an owner-driven contract terminates upon the owner’s death.

Conversely, an annuitant-driven contract reaches completion upon the annuitant’s death and consequently pays out its death benefit directly to the recipient in an owner-driven annuity.

In contrast, in an annuitant-driven contract, the death benefit is paid to the annuitant.

Furthermore, if the owner and annuitant are the same individuals, contractual benefits ought to be paid regardless of whether it is an owner-driven or an annuitant-driven contract since both have passed away.

Annuitant-Driven Contract

An annuitant-driven contract terminates upon the death of the annuitant. The death benefit then passes down to the designated beneficiary.

If the annuity owner dies, the annuitant receives the contract’s current values.

Owner-Driven Contract

Most annuities are owner-driven annuity contracts.

An owner-driven annuity terminates upon the death of the owner. The death benefit is then passed down to the designated beneficiary.

If the annuitant in an owner-driven contract dies first, the owner can become the annuitant or name a new annuitant, and the contract continues unchanged.

Deferred Annuity: Annuitant vs. Owner

OwnershipWho DiesResult
Annuitant and owner (same person)Annuitant/OwnerDeath benefit paid to the beneficiary
Annuitant and Owner (different people)OwnerDeath benefit paid to the beneficiary
Annuitant and Owner (different people)AnnuitantThe owner becomes an annuitant or names a new annuitant
Joint Ownership (annuitant/owner are different people)A Joint OwnerSurviving joint owner becomes the owner or receives the death benefit
Joint Ownership (annuitant/owner are different people)AnnuitantSurviving joint owner becomes annuitant or names a new annuitant
Annuitant and Owner are a Trust (different people)AnnuitantThe death benefit is paid to the beneficiary

Annuitant And Owner Are The Same People

When the owner and the annuitant are the same people, they will get all the benefits from their contract.

Can You Change The Annuitant On An Annuity?

In general, the annuitant of an annuity is the individual who owns the contract and will receive the income payments. It is usually not possible to change the annuitant on an annuity after the contract has been purchased.

However, it is possible to name a beneficiary to receive the income payments in the event of the annuitant’s death. This can typically be done by filling out a beneficiary designation form and submitting it to the insurance company. The beneficiary will then become the new annuitant of the annuity and will receive the income payments according to the terms of the contract.

It is essential to consider the annuity contract terms carefully and to review and update the beneficiary designation as needed to ensure that the income payments will go to the intended recipient. It is also a good idea to discuss the annuity and any changes to the beneficiary designation with an attorney or financial advisor to ensure that it aligns with your overall estate planning goals.

Next Steps

Now that we’ve looked at the key differences between owner-driven annuities and annuitant-driven annuity contracts, it should be easier for you to decide which type of contract is more beneficial for you. If you’re still not sure or have any questions, our team would be happy to help. We specialize in finding the right insurance solution for your unique needs and can provide you with a quote for an annuity contract that makes sense for you. Contact us today to get started.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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