Annuity Ownership Considerations

What is an annuity owner?

The owner or holder of an annuity policy

An annuity owner owns, or holds, an annuity policy.

An annuity policy is a contract between you and an insurance company (the issuer). In its simplest form, you pay the insurance company money, they invest it to earn tax-deferred returns, and then they pay the principal plus earnings back to you and/or your beneficiary. What most distinguishes an annuity from retirement plans is that income payments can be guaranteed for a lifetime and there's typically no limit to the amount that can be purchased in a given year.

Usually the purchaser of the annuity policy

The owner is usually the purchaser of the policy. However, the owner may also acquire the policy by gift, sale, exchange, or bequest.

Usually the annuitant

The annuitant provides the measuring life for determining the amount of the annuity payouts, in the event the option to annuitize is elected. The owner is usually also the annuitant.

Technical Note: This discussion pertains to commercial annuities. It does not pertain to private annuities, which are contractual arrangements between private parties.

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