Annuitant
An annuitant is the person who receives regular payments from an annuity contract. This individual is entitled to the periodic income payments, whether monthly, quarterly, or annually, as specified in the annuity agreement.
Example
“After retirement, Martha became the annuitant on her husband's pension plan, receiving $2,500 monthly payments.”
Memory Tip
Think 'annual recipient' - the annuitant receives annual (regular) payments from their annuity.
Why It Matters
Understanding who the annuitant is matters because this person receives the income payments, which may differ from who owns or purchased the annuity. This distinction affects tax implications and payment rights during retirement planning.
Common Misconception
Many people think the annuitant must always be the same person who purchased the annuity. In reality, someone can buy an annuity and designate a different person (like a spouse) as the annuitant who will receive the payments.
In Practice
John purchases a $200,000 immediate annuity at age 65 but names his wife Sarah as the annuitant. Based on Sarah's age of 62, the insurance company calculates she'll receive $1,100 monthly for life. Even though John paid for the annuity, Sarah is the annuitant who receives the payments. If John dies first, Sarah continues receiving the $1,100 monthly as the designated annuitant.
Etymology
Derived from the Latin 'annus' meaning year, combined with the suffix '-ant' meaning one who receives or performs an action.
Common Misspellings
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