Do you have an annuitant and beneficiary in your life? Do you know the difference between them? Your retirement plan or insurance policy could be impacted by how you answer those questions. When it comes to secure financial tools such as these, understanding the intricacies of each title is essential to get the best results for your future planning. In this blog post, we’ll explore exactly what each name means and why they are so important to consider when managing finances in order to make informed decisions. Read on to learn more!
What is Annuitant?
- The annuitant is a term used to describe someone who receives an annuity or a yearly payment. Annuities are offered by different kinds of financial institutions such as banks, life insurance companies, pension funds, and other investment vehicles.
- Annuitants usually receive consistent payments from these institutions for the duration of their lifetime or until a predetermined period. Annuitants can be individuals or businesses receiving these payments, but usually, annuity payments are directed towards an individual’s retirement fund and distributed throughout their later years in life.
- Annuities offer many advantages including tax deferral, predictable income streams, and protection from inflation. These benefits provide security for those nearing or enjoying their golden years.
What is Beneficiary?
- Annuity owners can designate Beneficiaries how their assets will be distributed upon their death, so it’s important for them to take the time to carefully consider who they want to receive the lump sum or annuities.
- Beneficiaries can be individuals, multiple people, charities, or even financial institutions such as banks. Beneficiary annuities are a good way for individuals to ensure their loved ones will be taken care of after they pass away, and can also provide beneficiaries with long-term financial security if funded correctly.
- To designate a Beneficiary on your annuity it is necessary to contact the provider and fill out any required paperwork. Once completed, your Beneficiary will have access to the requested funds when you pass away without having to endure any lengthy legal process.
Difference between Annuitant and Beneficiary
Annuitants and beneficiaries are two distinct roles associated with annuities.
- Annuitants are individuals who purchase annuities, typically to fund their retirement income. Annuitants generally make payments in exchange for a guaranteed income stream that lasts for their lifetime.
- Beneficiaries, on the other hand, will receive a payment if the annuity owner passes away before making all of their expected payments.
- Essentially, beneficiaries act as the second line of Security in case an annuity owner dies early and can no longer make payments.
Annuitants and beneficiaries play different yet interconnected roles when it comes to annuities, ensuring that an individual’s retirement savings are protected over time.
Now that you understand the difference between an annuitant and a beneficiary, as well as how important it is to designate one when opening an annuity, you can begin the process with confidence.