Annuitant: Definition, Types, Payments, and Tax Basics

What is an annuitant?

An annuitant is the person whose life expectancy is used to calculate payments under an annuity contract. Annuities provide a stream of payments either immediately or starting at a future date, and the annuitant’s age and life expectancy are primary factors in determining payment size and duration. The annuitant must be a natural person (not a corporation or trust).

How annuities work

An annuity pays a guaranteed income either for life or for a specified period.
The annuity owner (the person or entity that owns the contract) can name the annuitant and one or more beneficiaries.
Payments may be structured to continue to a surviving spouse or other designated beneficiary after the annuitant’s death, depending on the contract.

Types of annuities

Deferred annuity: Contributions are made over time (or a lump sum is invested) and payments begin at a future date. Often used for retirement savings.
Immediate annuity: A lump-sum payment is exchanged for payments that begin right away and continue for life or a specific period.
Period-certain (life-plus period certain): Payments are guaranteed for the annuitant’s life and for a minimum number of years even if the annuitant dies early.
Joint-life payout: Payments continue to a surviving joint annuitant (commonly a spouse) for the remainder of their life.

How payments are determined

Based on the annuitant’s age and life expectancy (and any joint annuitant’s age/life expectancy).
Based on the amount invested or the accumulated value in the contract.
Example: If a 65‑year‑old annuitant names a 60‑year‑old spouse as surviving annuitant, insurers will price payments assuming they may need to pay for the surviving spouse’s expected lifetime (e.g., roughly 24 years for a 60‑year‑old woman in many tables).

Annuitant vs. beneficiary vs. owner

Annuitant: person whose life determines payment timing and duration.
Owner: person or entity that owns the contract and controls its terms (may be different from the annuitant).
Beneficiary: person who receives death benefits if the contract provides them.
These are distinct roles in an annuity contract; the same person may fill more than one role (for example, the owner can also be the annuitant), but the roles serve different legal and practical functions.

What happens when the annuitant dies?

Single-life payout: Payments stop at the annuitant’s death; no further death benefit is paid.
Contracts with death benefits (period certain, joint life, or with a named beneficiary): Payments continue to a beneficiary or surviving joint annuitant as specified by the contract.
Whether and how payments continue depends entirely on the contract’s payout option.

Taxation basics

Annuity distributions are generally taxed as ordinary income.
Only the gain portion (the amount in excess of the contract holder’s basis or after-tax contributions) is taxable; the return of basis is not taxed when distributed.
Employer pension payments are typically taxed as ordinary income in full.
Tax rules can vary by contract type and jurisdiction; consult a tax advisor for specific situations.

Key takeaways

The annuitant’s life drives annuity payments; annuities can provide guaranteed retirement income.
Two main forms: deferred (savings accumulate; payments later) and immediate (payments begin now).
Payment amounts depend on invested amount and annuitant(s)’ ages/life expectancies.
Contracts differ on death benefits—single-life stops at death, while joint-life or period‑certain options continue payments.
Most annuity distributions are taxed as ordinary income, with only the gain portion taxable.

Bottom line

An annuitant is the individual whose life determines the timing and duration of annuity payments. Choosing the right annuity type and payout option affects income stability, survivorship protection, and tax treatment—so review contract details carefully and consult financial or tax professionals when appropriate.