An annuity owner names a beneficiary under a revocable designation. Which party generally holds the right to change that beneficiary?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The annuity owner, not the annuitant, controls all contract rights, including the right to name and change the beneficiary. Under a revocable designation, the owner may change the beneficiary at any time without the beneficiary's consent. The annuitant's role is limited to serving as the measuring life for income payments, so the annuitant has no authority over beneficiary designations unless he or she is also the owner. The designation remains revocable unless it is expressly made irrevocable, in which case the beneficiary's consent becomes necessary, but the owner's control is a central feature of annuity ownership under the contract.
Why the other options are wrong
- B) The annuitant's function is to serve as the measuring life for income payments. Unless the annuitant is also the owner, the annuitant has no authority to change the beneficiary designation.
- C) Under a revocable designation, the beneficiary has only an expectancy, not a vested right. A beneficiary therefore cannot block or direct a change, although an irrevocable beneficiary would have consent rights.
- D) The insurer administers the owner's change request but has no independent power to alter the designation. Contract rights, including beneficiary changes, belong to the owner, not the insurer.
Memory hook
Annuity owner = the one with the pen for beneficiary changes. Annuitant = just the timer.