Owners, Annuitants, and Their Effects On Annuity Policies — Annuity Terms Explained Simply

Written by Ariel Stern Updated October 8, 2025

If you are researching annuities, you have likely come across these words a few times: Annuitant, Owner, and maybe even Joint Owner or Joint Annuitant. So what do these titles mean and how do they affect the way your new annuity will operate? Read on as we break down these roles, their powers, and how they impact your money.

What is the Difference Between an Annuity’s Owner and Annuitant?

This may be the most important distinction to make about how annuities are structured. While the owner and annuitant are often the same person, they do not have to be. Additionally, these two entities impact your annuity’s taxation and rate.

Let’s Explain The Annuity’s Owner

The annuity’s owner is relatively straightforward to the extent that this is the person or entity that “owns” the annuity. The owner is responsible for paying taxes on the annuity. The owner also has the rights to change the terms of the annuity to the extent the contract allows. For instance, the owner of an annuity may:

• Change the beneficiaries (if applicable and so long as they are not irrevocable)
• Change the tax withholding from each payment (if any)
• Change annuity deposit accounts
• Make discretionary withdrawals (if allowed by the policy)

Essentially, the owner may exercise control over the annuity to the extent allowed under the contract. But the owner isn’t the person whose lifetime the annuity policy is based on. An owner does not even necessarily need to be a person. There are options for having non-natural owners such as a Trust.

So if the owner is not the person determining the annuity’s benefits, who is? That’s the annuitant. So who, then, is the annuitant and can they also be the owner?

What is an Annuitant?

The annuitant is the person whose lifetime the annuity is based on. For lifetime annuities, it is the annuitant’s age and gender that determines the payout rate. For growth-based annuities, the annuitant will not dictate the rate that you receive, but if you do purchase an annuity with an income rider, the distribution amounts under that income rider will be based on the annuitant.

The annuitant does not control the contract like the owner does. While it is common that the owner and annuitant are the same person, they do not have to be. Most insurers require that the annuitant have an “insurable interest” with respect to the owner. Insurable interest essentially means there needs to be a clear reason for the owner to take out a policy for the annuitant. Examples would be that the annuitant is married to the owner or a family member.

What is a beneficiary for an annuity?

A beneficiary is the person or people who receive the death benefits in the event the annuitant dies during the contract. If there are two annuitants, the beneficiary will receive the death benefit once both annuitants have passed. If there are no death benefits for the annuity, such as with a “Life Only” immediate annuity, there will be no beneficiaries designated.

The death benefits of an annuity can avoid probate, which can be a great benefit to your beneficiaries. When you designate beneficiaries under your annuity policy, you are allowing this money to avoid the probate process, thus making the benefits reach your loved ones faster.

However, this means that the way you set up your beneficiaries in your annuity are the way your death benefits are paid out (in the event you die). Estate planning and beneficiaries can be complicated, so it is important that you understand how beneficiaries work in your annuity. Check out our article devoted to understanding beneficiaries in an annuity policy.

What is the Difference Between a Joint Owner and Joint Annuitant?

Annuities can have joint annuitants and/or joint owners. This means that spouses and family members can purchase annuities together to protect two people.

Joint Owners

First let’s explore joint owners. Joint owners mean that two people own the annuity, with the joint owner having the same rights as the primary owner under the annuity contract.

Joint ownership is only available for non-qualified annuities. Qualified annuities must have one owner, as the annuity is issued as a Traditional or Roth IRA, which is only allowed to be owned by one person.

Often the joint owner of the annuity is also the joint annuitant. While this does not necessarily have to be the case, this is the most common setup when there is a joint owner to an annuity.

Joint Annuitants

The joint annuitant of the contract is a person who is also covered under the annuity contract. In the case of income annuities, the payout rate is based on both the primary annuitant’s and joint annuitant’s lifetimes. In the case of accumulation annuities, the annuity contract remains in effect so long as one of the annuitants is living.

How do Joint Annuitants Affect The Performance of Annuity Policies?

Let’s break apart annuity policies between income annuities (immediate annuities, deferred income annuities, and qualified longevity annuity contracts) and accumulation annuities (multi-year guarantee annuities and fixed index annuities).

Income Annuities

First let’s explore how joint annuitants work with income annuities such as immediate annuities or deferred income annuities. When an income annuity has joint annuitants, the annuity will make payments so long as either annuitant is still living. This means that the payout rate takes into consideration the life expectancies of both annuitants.

Generally speaking, you can expect to be paid less per month with joint annuitants than with a single annuitant. This is because you are protecting two people for both of their lifetimes. However, the difference in the payout rate depends entirely on the life expectancies of the joint annuitant.

For instance, adding a joint annuitant who is much older than you will have a lesser effect on your annuity payout than adding a joint annuitant who is much younger than you. This is because the insurer is estimating how long it will have to make payments to either annuitant.

However, adding a joint annuitant to an income annuity policy can help you cover both you and a loved one’s lifetime. It can guarantee an income stream that will last both of your lifetimes. Often, spouses and family members find the peace of mind this brings worth the reduction in payout rates.

Accumulation Annuities

With a growth-based annuity such as a Multi-Year Guarantee Annuity or Fixed Index Annuity, the annuitants do not affect the interest or crediting rates applied to the annuity. Instead, having joint annuitants simply means that if the primary annuitant passes away, the joint annuitant continues the contract to completion.

This can make a significant difference in the event the primary annuitant passes away, depending on the joint annuitant’s relationship to the primary annuitant. Let’s consider two scenarios with and without joint annuitants.

Scenario 1: A Husband and Wife Buy a Multi-Year Guarantee Annuity (MYGA)

Let’s say the husband is the primary annuitant and the wife is the joint annuitant. If he passes away before his wife, the contract just continues for the rest of the period under his wife.

However, if his wife is not the joint annuitant, but is instead the primary beneficiary, the wife has more options available to her. In this instance, she can end the policy and collect the annuity’s value. She may choose to collect these as a single lump sum, or can collect the death benefits within a defined period of time: 5 years for a non-qualified annuity and 10 years for a qualified annuity.

In addition to this, spouses are allowed “spousal continuation” under annuity policies, so the wife may choose to continue the multi-year guarantee annuity through spousal continuation. Spousal continuation simply means that the spouse of a deceased annuitant may assume ownership and become the annuitant of the deceased’s contract.

Scenario 2: A Mother and Daughter Buy a Multi-Year Guarantee Annuity (MYGA)

Let’s say that the mother is the primary annuitant in this scenario and the daughter is the joint annuitant. If she predeceases her daughter, the daughter can continue the MYGA as the joint annuitant to the end of the MYGA’s guarantee period.

However, if the daughter is not the joint annuitant and is instead the primary beneficiary, the daughter’s options change. As with scenario 1, the daughter can choose to collect the death benefit from the annuity as a lump sum or take distributions over a 5-year period. However, spousal continuation is not a possibility in this scenario as the primary beneficiary is the daughter, and not the spouse, of the primary annuitant.

How Should I Set Up My Annuity Contract?

Setting up your annuity contract is important to it performing the way you would like it to. This article is intended to familiarize you with some of the basic terms of annuity structures (owners, annuitants, beneficiaries), but does not cover all scenarios and possibilities.

If you have questions about setting up an annuity, please call one of our annuity experts at (866) 866-1999. We can walk you through how your annuity will operate both during and after your lifetime. Speaking with an expert can help you ensure that your annuity will not only serve you well, but your family and loved ones as well.

References:

• “Consumer’s Guide to Understanding Annuities” Wisconsin Office of the Commissioner of Insurance. Retrieved October 6, 2025.
• “Understanding Your Options as the Beneficiary of an Annuity” Pacific Life. Retrieved October 6, 2025.
• Bisco, J., Gradisher, S., and Wang, J. “Life Insurance Beneficiaries – Per Capita vs. Per Stirpes: Is It Really That Clear?” Journal of Insurance Regulation.