The annuitant is important because of a few characteristics. The main one is the annuitant’s date of birth (because this determines the annuitant’s age).
The annuitant’s age will affect how an annuity contract acts. For example, you might be looking at a lifetime payout from an annuity. The insurance company looks at statistics on life expectancy and then determines how much each payment should be.
If the annuitant is relatively young, then each payment will be smaller. This is because smaller payments will last longer than larger payments. Of course, the insurance company sometimes guarantees to continue payments for the entire life of the annuitant – even if it’s unusually long – but the insurance company tries to limit its risk by looking at statistics.
Another important characteristic is the annuitant’s sex. Because women tend to live longer than men, the insurance company has to budget for different lifespans depending on the annuitant’s sex.
Return to the Annuities Overview page.
