In an annuity contract, the 'annuitant' is the person:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The annuitant is the person whose life expectancy is used to calculate and measure the annuity payments; payments are made for the annuitant's life under life-contingent payout options. The owner is the party who controls the contract and can name the beneficiary, while the beneficiary is the party entitled to any death benefit. These three roles can be held by different people, so one person may be the owner, another the annuitant, and still another the beneficiary. An annuity provides income and accumulation, not life insurance protection, so the annuitant is not an insured in the life insurance sense.
Why the other options are wrong
- B) The owner is the party who controls the contract and makes decisions such as naming the beneficiary and surrendering the policy. The annuitant may or may not also be the owner, so ownership is not what defines the annuitant.
- C) The beneficiary is the party entitled to receive any death benefit payable under the contract when the owner or annuitant dies. That is a distinct role from the annuitant, who is simply the measuring life for income payments.
- D) An annuity provides income and accumulation and does not carry life insurance death protection. The annuitant's role is to determine the length of payments, not to be an insured under a life policy.
Memory hook
Annuitant = the human timer the payments tick against. Owner = the boss of the contract.