Principals Involved in an Annuity Contract
The parties involved in an annuity contract are the insurance company, the contract owner, the annuitant and at least one beneficiary.
The Insurance Company
Annuities can guarantee an income no matter how long you live and also protect you from out living your money. If set up properly an annuity can provide many more benefits to a policy holder including long term care benefits and income benefit riders.
The Contract Owner
As the owner of an annuity, a policy owner has many privileges and possible options:
Adding additional funds Taking money out of the annuity Change annuitant Change beneficiary Terminate the annuity
Annuitant
In most annuity contracts the owner and annuitant are the same. Some contracts are annuitant driven. If the annuitant is different from the owner, the owner can change annuitant at any time.
Annuitants can not:
Control the contract Make additional deposits Withdrawal money Terminate the annuity
The annuity remains in place until:
The contract owner makes policy changes (transfer of assets to another annuity). The Annuitant dies
Beneficiary
All annuities have a beneficiary designation and the insurance companies will not issue the policy until the beneficiary section of the policy is completed. You may have multiple beneficiaries but the total percentage of all beneficiaries must be 100%.
A beneficiary can be the annuitant, family trusts, corporations, or a partnership. Policy owners can also restrict the beneficiaries, meaning the owner can control the payout from the grave. Some owners do not wish the beneficiaries to receive the account value in one lump sum and rather opt for payments to be made over a period of time.
Multiple Titles
The contract owner can assign multiple titles to him/herself, the annuitant and possibly the beneficiary. The owner can also assign a trust to be the owner of the contract. Contrary to popular belief, an annuity held in the name of a trust has no advantages. An annuity works like a life policy. You can not contest an annuity, annuities avoid probate, and making the owner of an annuity a trust does not avoid a possible lawsuit.
Annuity Advantages
Safety Offers tax-deferred growth Provides an income you can not outlive Available riders
Robert Eldridge holds over a decade of experience as a multiline agent/wholesaler in multiple states and currently serves on the membership council of the National Association of Insurance and Financial Advisors.
If you would like more information on annuities, please click on the link below.
http://www.annuitycampus.com
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