Difference between Annuitant and Beneficiary

DifferencesFinanceInsurance & Investment

An annuity is a financial instrument that provides considerable benefits, including the accumulation of interest, the guarantee of a stable financial future, and the accumulation of monetary worth. Despite the fact that annuities may appear to be straightforward investments, it may be difficult to fully grasp all of the associated terms and conditions. There is a high potential for confusion about terms like the owner, annuitant, and beneficiary. On the other hand, they operate differently when applied to annuities.

Who is an Annuitant?

An individual who is entitled to receive regular periodic payments under the terms of an annuity contract for a certain amount of time is referred to as an annuitant. It is possible to identify more than one person as an annuitant, and each of those people might be either a spouse or a person who is not a spouse. However, a trust or a firm cannot be an annuitant in any circumstance. Individuals can become annuitants by purchasing annuities for themselves and therefore become, annuitants.

If a husband decides to purchase an annuity, for instance, his son will take on the role of the annuitant, while the husband's wife will be the beneficiary of the policy. In the case that the son passes away, it is the responsibility of the wife to collect the earnings and pay the income tax going forward.

Who is a Beneficiary?

An owner of an annuity has the ability to select beneficiaries whose participation is contingent upon either the death of the annuitant or the owner. Additionally, the owner has the ability to alter the beneficiary whenever he or she sees fit, and there might be one, two, or even more beneficiaries. Even while children under the age of majority can be selected as beneficiaries, they are not eligible to receive the inheritance until they attain adulthood.

The stepped increased death rider benefit, the normal death benefit, and the return of premium are all examples of beneficiary alternatives available with annuities.

Differences: Annuitant and Beneficiary

Both Annuitants and Beneficiaries benefit from the owners' annuity. The following table highlights the difference between an Annuitant and a Beneficiary −

Characteristics Annuitant Beneficiary
Definition An individual who has entered into an annuity contract and is afterward entitled to receive regular periodic payments for a certain amount of time is referred to as an annuitant. A person who is designated to receive the benefits of an annuity in the event that the annuitant passes away is referred to as the beneficiary.

Conclusion

An annuitant is a person who receives regular monthly payments from an annuity contract over the course of a certain amount of time, whereas a beneficiary is the one who is on the receiving end of annuity benefits in the event that the annuitant passes away.

raja
Updated on 18-Aug-2022 13:55:39

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