The annuitant in an annuity contract is the person whose life expectancy influences payment amounts. Usually, the annuitant is also the owner. Alternative choices often include a spouse or relative.

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  • Written By
    Jennifer Schell, CAS®

    Jennifer Schell, CAS®

    Financial Writer, Certified Annuity Specialist®

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

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    Savannah Pittle
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    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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    Thomas J. Brock, CFA®, CPA
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    Thomas J. Brock, CFA®, CPA

    Investment, Corporate Finance and Accounting Professional

    Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

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  • Updated: March 26, 2024
  • 6 min read time
  • This page features 5 Cited Research Articles

Key Takeaways

  • The annuitant is often called the “measuring life” in insurance terms because their life expectancy affects payouts.
  • An annuitant who is not the owner cannot change the annuity contract or beneficiaries, make contributions or withdraw money from the annuity.
  • Beneficiaries receive death benefits from annuities. Their collection methods and tax implications differ based on their relationship to the annuity owner.

What Is an Annuitant?

The annuitant is the person whose life determines the annuity payouts. In the insurance industry, the annuitant is referred to as the “measuring life.”

Annuities are generally set up to provide lifetime income. This means that the annuity provider must use a real person’s life expectancy to calculate the annuity payment amounts. Every annuity contract must have an annuitant, and there cannot be more than one annuitant on a contract.

Did You Know?

Insurance companies use a number of factors to calculate the periodic payout from an annuity. The age, sex and life expectancy of the annuitant is a key element in this formula.

The role of annuitant often overlaps with another role in the annuity contract, the annuity owner.

The Annuitant vs. The Annuity Owner

The annuity owner is the person who decides the terms of the contract, including the date on which income benefits begin, how long they last and who is named as the beneficiary. They pay the initial premium to the insurance company and have the authority to make withdrawals, change the beneficiaries named in the contract and terminate the annuity.

People often mistakenly believe that the owner of an annuity contract is always the annuitant. While it is common for the annuity owner to also be the annuitant, it is not a requirement, and many annuity owners choose to name someone else as the annuitant.

Infographic Describing an Annuitant vs. Owner

An annuitant who is not also the annuity owner does not have the authority to change the beneficiaries listed in the annuity contract or make any other amendments to the contract. Furthermore, he or she can’t contribute or withdraw money.

There are various reasons an annuity owner may decide to designate an annuitant other than themselves. By selecting a younger annuitant, for example, the annuity owner can stretch out the payments and defer the income tax owed on distributions for a longer period of time.

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Distinguishing Between an Annuitant and a Beneficiary

Beneficiaries are the third named party to an annuity contract. Whereas the annuity owner and the annuitant may be the same person, a beneficiary is a separate person or entity.

For contracts with a death benefit, the beneficiary is entitled to receive such a benefit upon the death of the owner, annuitant or annuitants.

When an annuity owner’s spouse is the sole beneficiary of the contract, the spouse is permitted to assume ownership of the annuity, continuing to receive periodic payments and deferring income tax. 

This is not the case with non-spouse beneficiaries. A fundamental difference between spouse beneficiaries and non-spouse beneficiaries is the manner in which they are required to collect the funds.

Non-spouse beneficiaries have various options for collecting their annuity inheritance:

  • Take a lump-sum distribution
  • Collect the entire cash value of the annuity within five years of the annuitant’s death
  • Annuitize the proceeds
  • Take an annual required distribution based on his or her own life expectancy, known as the “stretch provision”

Since the passage of the SECURE Act, non-spouse beneficiaries of qualified annuities — annuities purchased with pre-tax funds like those from a traditional 401(k) — can no longer utilize the stretch provision for their inherited annuity. The law now requires beneficiaries to collect the entire value of the annuity contract and pay any taxes due on that amount within 10 years of inheriting the annuity.

Infographic Describing an Annuitant vs. Beneficiary

Lastly, a fourth designation that may exist in an annuity contract is the payee. The payee is the person who receives the payments from the annuity. The payee can be the annuitant, the annuity owner or a third party authorized to handle the annuity owner’s finances.

Real-World Example

The Defense Finance and Accounting Service allows a “representative payee” to make pay-related changes on behalf of an adult annuitant. The DFAS, not the annuitant, appoints this payee and the payee must provide a medical statement indicating that the annuitant is incapable of handling their own affairs.

Annuities are a product marketed by life insurance companies. Pricing is determined by statistical professionals referred to as actuaries. For any given annuity, a focal point for an actuary is the annuitant, which is the person whose life determines the annuity’s payouts.

Joint Ownership vs. Joint and Survivor Annuities

Annuities can be jointly owned. If one owner dies, the death benefit is paid to the beneficiary even if the other owner is alive. At that point, payments to the second annuity owner stop.

To avoid this, consider a joint and survivor annuity that guarantees payments that last for the duration of your life and the life of one other person. This person, usually a spouse, is a second annuitant, not a beneficiary.

Joint and survivor annuities allow the surviving spouse to continue receiving payouts on the existing payment schedule. However, the arrangement will also prevent the surviving spouse from taking a lump sum from the annuity should they need it for unexpected expenses, like funeral and burial costs.

Another strategy would be for the owner of a single life annuity to name a second person as a beneficiary.

For example, imagine a husband who wishes for his wife to get his annuity payments upon his death, and later for their child to collect the proceeds after her passing. He can set himself as the owner and annuitant, his wife as the primary beneficiary, and the child as the next in line or contingent beneficiary

It’s important to understand the differences among these designations, including those between spouse and non-spouse beneficiaries, to ensure that you structure your annuity contract appropriately. 

If you have questions about the specific designations, payout options, tax implications or other features, contact a professional financial advisor for assistance.

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Frequently Asked Questions About Annuitants

Can the annuitant and beneficiary be the same person?

The annuity beneficiary is the person who receives the annuity’s death benefit. The annuitant is the person whose death triggers the death benefit payout. So, the annuitant and beneficiary cannot be the same person.

Can you change the annuitant on an annuity?

The rules for changing the annuitant vary depending on the company issuing the annuity, the type of annuity involved and state and federal regulations. Refer to your annuity’s contract for the rules in its particular case.

What is the difference between an annuitant and a retiree?

An annuitant is someone whose life determines an annuity’s payouts. In some cases an annuity’s owner,  the person who receives the payments, is the same as the annuitant. A retiree can be an annuitant if they buy a retirement annuity or another annuity and name themselves the annuitant. However, an annuitant is not necessarily a retiree.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: March 26, 2024
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