What is an Annuitant?

The term “annuitant” is used in several different ways. The original and most conventional meaning of the term is someone who benefits from an annuity, a type of insurance policy which is purchased to provide someone with a steady income in retirement. The term has also be extended to refer to beneficiaries of some life insurance policies, and to a special class of government employee. Usually, the meaning of the word is clear from the context in which it is used.

When discussing someone who benefits from an annuity, the annuitant is the person contractually entitled to the benefits of the annuity. He or she may be actively receiving benefits, or may be listed as a beneficiary who will receive benefits once the annuity starts to pay out. People can buy annuities for themselves, in which case they are the annuitants, or annuities can be purchased on behalf of other people, such as family members or employees. An annuitant may also share benefits, as when a couple purchases an annuity together and they designate each other as annuitants in the event that one partner dies.

Annuitants receive set sums every month which are set out in the contract for the annuity. Depending on the structure of the annuity, the payouts may continue until the annuitant dies, or they may be limited to a set period of years. Annuities are viewed as retirement investments which are well-suited to people with stable jobs and economic positions, as they can be very unflexible, with penalties for people who cash out annuities early.

Some people may refer to the beneficiary of a life insurance policy as an annuitant. Like the beneficiaries of annuities, people who benefit from life insurance receive money which is designed to compensate for the loss of income. Usually, the benefits are provided in the form of a single lump sum payment, rather than an extended series of payments which provide regular income.

Retired employees who receive benefits, but are still available for work, may also be known as annuitants. A government annuitant can resume part-time work for the government without losing benefits, as long as his or her work hours do not exceed a cap set by the government. Rehired annuitants benefit the government by providing their expertise and advice to younger employees, along with labor which can fill a gap when a government agency is pressed for workers.