An annuity is an economic tool with major benefits including interest accrual, securing financial future and monetary value accrual. While annuities sound like simple investments, it can be challenging to understand the terms and policies involved. Terms such as the owner, annuitant, and beneficiary may be easily confused. They are, however, different in the annuity context.
What is Annuitant?
This is an individual who receives regular periodic payments during a specified period of time of an annuity contract. In the naming of annuitants, more than one person can be named and can either be a spouse or a non-spouse. An annuitant, however, cannot be a trust or a company. Annuities can be purchased for self thus making them annuitants.
For example, if a husband buys an annuity, his son becomes the annuitant while his wife is the beneficiary. In the event that the son dies, the wife should take the proceeds and pay the income tax henceforth.
What is Beneficiary?
An annuity owner can designate beneficiaries, whose action can only be triggered by either the annuitant or owners death. The owner can also change the beneficiary as he or she pleases, and can have one or more beneficiaries. While minors can be chosen as beneficiaries, they cannot receive the inheritance until they reach the age of majority.
Some annuity beneficiary options include the standard death benefit, return of premium and stepped up death rider benefits.
Similarities between Annuitant and Beneficiary
- Both benefit from the owners’ annuity
Differences between Annuitant and Beneficiary
Definition
An annuitant is an individual who receives regular periodic payments during a specified period of time of an annuity contract. On the other hand, a beneficiary is a person who receives the annuity benefits in case of the annuitant’s death.
Annuitant vs. Beneficiary: Comparison Table
Summary of Annuitant vs. Beneficiary
While an annuitant is an individual who receives regular periodic payments during a specified period of time of an annuity contract, a beneficiary is a person who receives the annuity benefits in case of the annuitant’s death.