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Guilherme Mazui

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What is the Difference Between Annuitant and Beneficiary?

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The main difference between an annuitant and a beneficiary lies in their roles within an annuity contract:

  • Annuitant: The annuitant is the person whose life determines the payouts of the annuity. Their life expectancy is used to calculate the amount of regular income payments they will receive from the annuity. The annuitant is often referred to as the "measuring life" in insurance terms. They cannot change the annuity contract or beneficiaries, make contributions, or withdraw money from the annuity.
  • Beneficiary: The beneficiary is the person who receives the annuity's death benefit when the annuitant passes away. Beneficiaries are the third-named party to an annuity contract, and they can be separate persons or entities. The death benefit from an annuity with a named beneficiary is not subject to probate. Spousal beneficiaries may be able to change the contract to their name and continue receiving payments.

Here are some key differences between annuitants and beneficiaries:

Characteristics Annuitant Beneficiary
Definition An individual who receives regular income payments from an annuity. A person designated to receive the benefits of an annuity in the event that the annuitant passes away.
Role in Annuity Contract Determines the payouts of the annuity based on their life expectancy. Receives the annuity's death benefit when the annuitant passes away.
Ability to Change Contract/Beneficiaries Cannot change the annuity contract or beneficiaries, make contributions, or withdraw money from the annuity. Can be changed by the annuity owner.

It is important for both annuitants and beneficiaries to understand their roles and entitlements within an annuity contract.

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  • What is the Difference Between Annuitant and Beneficiary?
  • Comparative Table: Annuitant vs Beneficiary

    • Comparative Table: Annuitant vs Beneficiary

    Feature Annuitant Beneficiary
    Definition The annuitant is the person who receives the annuity payments and is usually the person whose life expectancy is used to calculate the annuity benefit payments. The beneficiary is the person who receives the remaining annuity payments or the death benefit upon the annuitant's death.
    Role in Annuity Contract The annuitant is the person whose life expectancy is used to calculate the annuity benefit payments, and they are the ones who receive the annuity payments. The beneficiary is the person who receives the death benefits, usually the remaining contract value or the amount of premiums minus any withdrawals, upon the annuitant's death.
    Payout Options The payout options for an annuity beneficiary depend on whether the annuity is in the accumulation phase or payout phase. In the accumulation phase, beneficiaries receive the total amount contributed to the account. Once the annuity is in the payout phase, the beneficiary subtracts payments already made to the annuitant. Spousal beneficiaries may be able to change the contract to their name and continue receiving payments. Non-spouse beneficiaries have various options for collecting their annuity inheritance, such as taking a lump-sum distribution.
    Taxation Withdrawals made by an annuitant are subject to ordinary income tax if the annuity was purchased with pre-tax dollars. Beneficiaries who inherit an annuity must pay income tax on the difference between the premium paid and the remaining contract value. The death benefit from an annuity that has a named beneficiary is not subject to probate.

    An annuitant and a beneficiary serve different functions in an annuity contract, and they cannot be the same person. The annuity owner can designate beneficiaries and decide on death benefits.

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    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.