What Is an Annuitant?

An annuitant is a person who receives the income benefits of an annuity. The annuitant's life expectancy determines when the annuity payout occurs. Annuitants can also be the annuity owner or contract holder. After the death of the annuitant, a beneficiary receives the remaining payout.

Difference Between Annuitant and Owner or Contract Holder

An annuitant and a contract owner or holder can be the same person. The owner is responsible for determining the terms of the contract for the annuity, like who will be the beneficiary and when payments will begin.

The owner or holder is in control of the annuity and is the only one who can make changes to its structure or who will serve as a beneficiary.

Whether they are also the contract owner or not, the annuitant is the person whose lifespan the annuity is based. This arrangement can also be referred to as the measuring life and cannot be changed.

Suppose an annuitant is not the contract holder or owner. In that case, they lack authorization to make changes to the beneficiaries or withdraw or add funds.

The annuitant also must be a person and not a company or group.

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Difference Between Annuitant and Beneficiary

While an annuitant and contract owner or holder can be the same person, an annuitant cannot also be the beneficiary.

Beneficiaries receive the remaining payout of the annuity when the annuitant or measuring life dies.

Annuities have several payout options. You can take the remaining funds in a lump sum distribution or annuitize the distribution over five years.

While you will receive a significant amount of money at once with a lump sum, this also can mean more taxes.
Receiving the payout over five years means you will get money in smaller increments. Also, you will not be responsible for a sizeable amount in taxes at once.

Regardless of which option you choose, the annuity distributes within five years of the annuitant’s death.

For non-spousal beneficiaries, your relationship to the annuitant will change how you receive payouts and over what amount of time.

The lump-sum and five-year payout options are available if you are a spouse and beneficiary. In addition, you also have the option to become the annuity owner after the annuitant’s death.

You could also consider a joint and survivor annuity. In that setup, the payout of the annuity will last for the duration of your life and one other person, like a spouse.

You both serve as annuitants from the start and can receive regular annuity payments and tax-deferred benefits.

Last Modified: July 20, 2021

5 Cited Research Articles

  1. Lake, R. (2020, January 8). What Happens to an Annuity When You Die? Retrieved from https://finance.yahoo.com/news/happens-annuity-die-234955255.html
  2. Internal Revenue Service. (2020). Pension and Annuity Income. Retrieved from https://www.irs.gov/pub/irs-pdf/p575.pdf
  3. Internal Revenue Service. (n.d.). Annuities – a Brief Description. Retrieved from https://www.irs.gov/retirement-plans/annuities-a-brief-description
  4. Society for Annuity Facts and Education. (n.d.). Glossary. Retrieved from https://www.safeannuityeducation.org/about-annuities/common-annuity-related-terms/
  5. Bouman Law Firm. (n.d.). What You Should Know About Annuities after the Owner’s Death. Retrieved from https://www.tomboumanlaw.com/annuities.html