What is Annuitant?

As per the annuitant meaning, annuity is used to define the regular Income earned from specific types of investment or the pension. It could be the pension plan the person signed up for.

The total amount you could earn from the annuitant relies mainly on the total amount the contract holder invested as well as the life expectancy of the contract.

How Does Annuity Work?

Mostly, annuity is the income for lifetime. That means the person entitled to receive this payment can expect the annuity to be received for their entire life. However, it could also last for a specific period. It’s important to note that the annuitant can be a civil servant that has retired or a professional investor that has invested in Mutual Funds or other securities. Usually, it is the individual that has signed up for an insurance plan and is entitled to receive payments regularly until the contract reaches an expiry.

In certain contracts, the owner could involve multiple annuitants. For example, they could add their close family member, a spouse, and children as the annuitants of the contract. The annuitant of the contract has the right to send the payments received from the investment to the surviving spouse in case of emergency. However, the annuitant is supposed to be an individual, not a trust or organization.

As mentioned earlier, the length of the annuity depends on the life expectancy of the annuitant and other beneficiaries associated with the contract. Basically, the duration depends on the life expectancy of the contract holder. In some cases, one person could be entitled to receive the payments for the lifetime, and the same will be transferred to the surviving spouse if the first annuitant dies. There is also a possibility the annuity could last for a specific number of years. Suppose a 70 year old annuitant has invested in a project that guarantees annuity to the surviving wife who is 60-year-old.

Now, the annuity will be given to the wife for the next 24 years, as it happens to be the life expectancy of an older woman.

Different Types of Annuities

There are quite a few types of annuities, but the most popular options are mentioned below:

Deferred annuity

Deferred annuity is kind of a retirement payment vehicle, in which the annuitant keeps spending money on a specific project just so they can get a source of the regular payments at the time of retirement or in emergency. This investment can help them generate regular returns for the duration of the contract.

Immediate annuity

As the name suggests, immediate annuity is a contract in which the individual invests a lump sum to get regular annuity payments that start right after the person has made the investment. This amount will be paid to them for the lifetime or the mentioned duration.