Contingent Annuitant

A contingent annuitant is an individual that continues to receive an annuity’s payments after the primary annuitant passes away. Annuities with a contingent annuitant do not stop making payments until both the primary and contingent annuitant have died.

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  • Written By
    Thomas J. Brock, CFA®, CPA

    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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    Lamia Chowdhury
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    Lamia Chowdhury

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    Stephen Kates, CFP®
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    Stephen Kates, CFP®

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    Stephen Kates is a Certified Financial Planner™ and personal finance expert specializing in financial planning and education. Stephen has expertise in wealth management, personal finance, investing and retirement planning.

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  • Updated: October 30, 2023
  • 3 min read time
  • This page features 2 Cited Research Articles

What Is a Contingent Annuitant?

A contingent annuitant, often referred to as a secondary annuitant, is an individual designated to receive an annuity’s payments after the primary annuitant dies. When an annuity includes a contingent annuitant, its payments will continue until both the primary and secondary annuitants are deceased.

Before elaborating, let’s take a step back and define an annuity.

An annuity is a financial contract between the contract owner and an annuity provider. In exchange for an upfront payment or a set of installment payments, the provider issues the annuitant — usually the contract owner — a series of income distributions.

The distributions can vary depending on the nature of the contract. Regardless, the frequency of the payments is fixed, and they end at a specified point in time. Generally, the expiration date is either defined as a certain number of years, which is a period certain annuity, or the lifetime of the annuitant, which is a straight life annuity.

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How Does a Contingent Annuitant Work?

Most issuers for a straight life annuity allow you the option to name a primary annuitant and a contingent annuitant. An annuity with both is commonly referred to as a joint-and-survivor annuity.

A joint-and-survivor annuity provides a payment stream for as long as one of the two named annuitants are alive. It does not matter whether the primary or the contingent annuitant dies first, the terms of the contract ensure a continuous payment.

Generally, an annuity that includes a contingent annuitant makes lower payments than one with a single annuitant. Moreover, the greater the life expectancies of the primary and secondary annuitant, the smaller the distribution payment.

A joint-and-survivor annuity’s payment amount is also influenced by the benefit election for the contingent annuitant. Usually, this ranges from 50% to 100% of the payout made to the primary annuitant. The higher the benefit election, the lower the payment made to the primary annuitant.

Let’s clarify all of this with an example.

Contingent Annuitant Example

Joseph, a 55-year-old man, has decided to buy a $500,000 deferred fixed annuity as part of his retirement plan. The contract, which names him as the annuitant, specifies a 10-year accumulation period and monthly income distributions of $5,000 for life starting at 65 years old.

The terms make sense to Joseph, but he’s worried about his wife, Phoebe. He wants to make sure she’ll continue to receive some income — in the event he dies before her. The annuity provider explains how this can be achieved via a joint-and-several contract, with Phoebe as the contingent annuitant.

Joseph elects to purchase the joint-and-survivor annuity, with a 100% benefit election for Phoebe. Ultimately, this results in a monthly payment of $4,000 that will continue for as long as either Joseph or Phoebe lives.

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Other Frequently Asked Questions

Why would someone want or need a contingent annuitant?

A contingent annuitant is included in an annuity contract when you want to provide ongoing financial security to another individual. A joint-and-survivor annuity ensures your loved one will continue to receive income after your death.

Who qualifies as a contingent annuitant?

Most joint-and-survivor annuities name the primary annuitant’s spouse or domestic partner as the contingent annuitant. However, anyone can be named as a contingent annuitant.

Can a contingent annuitant be changed?

Generally, once an annuity starts making payments, the contingent annuitant cannot be changed. However, if the contingent annuitant dies before the primary annuitant, the contract owner may have the option to name a new contingent annuitant. It depends on the terms of the contract.

What is the difference between a contingent annuitant and a beneficiary?

A contingent annuitant is not to be confused with an annuity’s beneficiary. For an annuity that contains a death-benefit provision, the beneficiary is the person who is entitled to receive the remaining cash value of the contract upon the death of the annuitant — or annuitants, in the case of a joint-and-survivor annuity.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: October 30, 2023
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