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If you've heard of annuities in West Detroit, you must have known how complicated they can be. There are many confusing terminologies, like annuity owner, annuitant, and beneficiary. These three terms are often misunderstood by many. Luckily fiduciaries are dedicated to explaining the differences to their clients.  

fiduciary explaining about annuities in West Detroit

Annuity Owner, Annuitant, and Beneficiary: What Are These Terms?  

Annuity Owner

An annuity owner is a consumer that goes into a contract with an insurance company. They pay the initial premium to the insurer. They can decide on the contract terms – like the specified period that income benefits begin and how long they last. They can choose who to assign as their annuitants and beneficiaries, of which they can change as they please at any time.  

Most annuities are owner-driven. That is, when the owner of an annuity dies, the annuitant receives the defined death benefit. It can be in a lump sum or a lifetime income. On the other hand, if the annuitant dies, the owner may become the annuitant and enjoy all the financial benefits or choose to appoint another annuitant.  


In the world of insurance, the annuitant is otherwise known as "measuring life." They are used to determine the annuity payouts. Although many factors are considered in calculating the periodic payout from an annuity, the most common ones are the annuitant's age, gender, and life expectancy.  

However, the annuitant has no power to decide on the annuity. They cannot alter the terms of the grant nor change the names of the beneficiaries. Annuity owners often choose a younger annuitant to stretch out the payments and have tax-deferred income for a more extended time.  


The beneficiary can be a spouse or non-spouse. When the beneficiary is a spouse, they are allowed to change the contract under their name and assume all rules and rights. They can collect all remaining payments and claim the death benefits. In this case, they become the new annuitant.  

Under such a setup, the spouse takes charge of the stream payments in a spousal continuation clause. In this case, the spouse can continue to enjoy tax-deferred status and guarantee a lifetime of financial security.  

On the other hand, a non-spouse beneficiary can't amend the contract's provisions. They will have to abide by the initial agreement made by the annuity owner.  

Can a Minor Be a Beneficiary?  

Yes, the annuity owner can designate a minor to be a beneficiary. However, they will not be able to receive their inherited annuity until they reach the age of majority. There is no fixed age of majority for all states as they have different guidelines about the matter.  

How About a Pet?  

Unfortunately, your pet cannot be your beneficiary, no matter how much you love them. But you can include in your will and contract that you will want to open a trust to shoulder your pet's needs for as long as they live. You may also assign a person in that contract to handle the finances.  

What if I Don’t Assign a Beneficiary?  

Married annuity owners shouldn't assume that their spouse automatically becomes the beneficiary when they pass. In this case, the process goes through probate, a legal procedure used to distribute a deceased person's estate. This process is long-winding and costly. There is also a possibility that the assets will be forfeited to the issuing insurance company.  

old couple getting annuities in West Detroit

Need Assistance With Annuities in West Detroit?  

An annuity allows you to receive significant benefits to secure your financial future. However, if you don't do it the right way, you may have to say goodbye to the money you worked hard to save for years. Therefore, our mission at ABB Wealth Strategies is to guide our clients so that they make the best choice. Talk to us today to learn more.