Annuitant
An annuitant is the person who receives regular payments from an annuity contract. This individual is entitled to the income stream generated by the annuity for a specified period or for life.
Example
“After retiring at 65, Margaret became the annuitant on her $500,000 fixed annuity, receiving $2,500 monthly payments for life.”
Memory Tip
Remember 'Annuitant' as 'Annual-ant' - the ant that gets annual payments from the annuity hill.
Why It Matters
Understanding your role as an annuitant is crucial for retirement planning, as it determines who receives the income payments and under what conditions. The annuitant's age and health often affect payout amounts and contract terms, directly impacting your financial security in retirement.
Common Misconception
Many people think the annuitant and the annuity owner are always the same person, but they can be different. For example, a spouse might own the annuity contract while designating their partner as the annuitant who receives the payments.
In Practice
John owns a $300,000 immediate annuity but names his wife Sarah as the annuitant. Based on Sarah's age of 67, the insurance company calculates monthly payments of $1,847 for her lifetime. Even though John purchased the annuity, Sarah receives all payments as the designated annuitant. If Sarah passes away, the payments typically stop unless a survivor benefit was included in the original contract.
Etymology
Derived from the Latin 'annuus' meaning yearly, combined with the suffix '-ant' indicating a person who performs or receives an action.
Common Misspellings
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See Also
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