Difference Between Annuitant and Beneficiary

Common men usually invest their savings in multiple ways like – investing in the stock market, mutual funds, issuing policies, fixed deposits, etc., for securing their future. These investments have always been a source of benefit at the worst phase of their lives.

/5

Finance Quiz

Test your knowledge about topics related to finance

1 / 5

Government grants are generally offered to businesses in:

2 / 5

What is the difference between saving and investing?

3 / 5

If  a bank thinks lending money  to a certain business is risky it will:

4 / 5

Why do companies engage in M&A?

5 / 5

Share capital is

Your score is

0%

But all of these investments must be done with proper documentation legally and understanding the full and final conditions of the same.

Annuitant vs Beneficiary

The difference between Annuitant and Beneficiary is that Annuitant usually makes an investment in something like – bonds, policies, funds, etc. and after some time, they use to receive it back every month whereas comparatively, on the other side, a beneficiary doesn’t do any such commitments but only gets the profit in all case.

Annuitant vs Beneficiary

Annuitant makes a certain investment in which in the starting they had to invest a huge lump of money and then after a certain period, they receive it back on a monthly basis. This can be somehow taken as the retirement fund.

The money is given to the same person who made the annuity, but sometimes, in certain cases like the death of the Annuitant, the beneficiary or nominee gets it. The beneficiary is said to be a person who only gets the profit.

The person doesn’t have to make any investment or had to deposit any sort of money but can get one. They are nominated by the person who had issued or opened any certain policy or deposits, or funds.

Comparison Table

Parameters of ComparisonAnnuitantBeneficiary
DefinitionThe person that has invested with an expectation of surety of return with retirementIndividual who tends to get benefits on someone else investment
Tax PaymentLiableNon-liable
Decision MakingThey have complete rights to do soThey don’t have any right to make a decision
TypesFixed and VariableNo such things
Profit Received By themselves but in some cases like after death beneficiary gets itIn some cases

What is Annuitant?

An annuitant is said to be a person that has made an investment in some annuity, and the return of investment is expected to be sure along with the retirement. In other words, it sometimes may refer to be as a retirement fund for some people.

An annuity is opened by a huge lump of money, and the money deposits are made in the starting itself, and after that, the withdraw can be made periodically. The person who has bought the annuity is said to be liable for paying taxes to the government for a certain time.

Plus, sometimes it also helps in saving the tax, but a condition for tax payment is that if the individual gets the payment before 59.5 age of themselves, they are said to be liable for paying a penalty of 10%. The Annuitant is liable to make any important decision regarding the annuity.

Even if the Annuitant has to add any beneficiary or nominee in it, they have to fully mention their respective full name with the percentage they are allotting them. And the most common annuity is known as fixed and variable annuities.

What is Beneficiary?

The beneficiary is used for the individual or the particular group that will be getting any advantage or profit from certain investments. These individuals are don’t have to make any money deposits or have to spend a penny for getting these returns from an annuity or bond, or insurance, etc.

Even though unlike, the Annuitant, they aren’t liable for any tax on the money they receive. In some cases like, life insurance or making any annuity, it is necessary to make a beneficiary or nominee for future reference.

When an annuity is taken, the buyer is the first beneficiary in the case but sometimes to avoid any inconvenience because of the buyer if he/she dies, then the rest of the payment will stop, but if any other beneficiary is added, then the payment is taken by them. In a similar case of life insurance, the buyer has to mention the nominee or the beneficiary even if they are their respective children receiving proportionately or disproportionately it must be mentioned.

The individual is also not said to take any decision related to the insurance, bonds, funds, etc. But they only have to count the profit received in these cases.

Main Differences Between Annuitant and Beneficiary

  1. The word Annuitant is used for the individual who buys an annuity and gets an assured return along with retirement, whereas comparatively, on the other side, the word beneficiary is used for the individual or group of individuals that gets a benefit from the annuity. 
  2. The Annuitant is said to be liable for paying tax on the money they receive from the annuity, whereas comparatively, on the other hand, the beneficiary is said to be not liable in any case to pay any tax payment or penalty on the receiving money.
  3. The Annuitant has authority for making certain decisions regarding their annuity, whereas comparatively, on the other hand, the beneficiary does not have any such kind of authority for taking any decision. 
  4. An annuity can be classified into two main groups, the fixed annuity or the variable annuity, whereas comparatively, on the other hand, there are no such types in the beneficiary. 
  5. The profit received by annuitants is when if they are also mentioned as the first beneficiary in their annuity, whereas comparatively, on the other side, the profit received by a beneficiary is directly only in some cases. 
Difference Between Annuitant and Beneficiary

References

  1. https://heinonline.org/HOL/LandingPage?handle=hein.journals/ssbul40&div=87&id=&page=
  2. https://heinonline.org/HOL/LandingPage?handle=hein.journals/taxlr9&div=28&id=&page=
  3. https://heinonline.org/HOL/LandingPage?handle=hein.journals/ssbul44&div=48&id=&page=
  4. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1475-5890.2001.tb00042.x
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️