Annuity Beneficiary – What are Annuity Beneficiaries
Annuity Beneficiary – What are Annuity Beneficiaries
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What is an annuity beneficiary – What to know about annuity beneficiaries? http://www.RetireSharp.com 1-800-566-1002. What are the best type of annuity beneficiary designations for retirement and learn how you can avoid the most common mistakes that individuals have made when setting up their annuity beneficiaries.
Who is an Annuity Beneficiary?
Annuity beneficiaries are those who receive the returns on the annuity plans that are undertaken by a particular person after his or her demise. The name and relation of the beneficiary is to be mentioned in the annuity contract. Only then will the annuity beneficiary start receiving the payments that were initially received by the annuity holder during his or her years of life.
Like inheritors in other monetary case, an annuity beneficiary can also be subject to taxes, depending upon the terms of the contract and the rules applicable to them. But, thankfully, most annuities are less susceptible to annuity taxes than other forms of inheritance. This is mainly because the payments are made through an insurance company. In order for a beneficiary to receive annuity returns, his or her name is required to be mentioned in the annuity contract by the owner of the contract before he or she passed away.
The amount of taxes to be imposed will be determined by the insurance company, depending upon the investment amount and the kind of annuity investment that has been made. Therefore, it is very important for an annuity owner to read all the clauses and regulations that are mentioned in the contract before signing it.
An annuity owner has the right to change his annuity contract and can demand to change the annuity beneficiary’s name mentioned in his contract. If he or she wishes to make a change in the annuity contract regarding the beneficiary’s name, the person is usually required to fill out the required form and give it to his financial insurance agent who handles his annuity contract. The agent will then make the necessary changes in the contract.
Since it will be your money going into the hands of other post your death, it is very important as an annuity holder to choose your annuity beneficiary very wisely. If the beneficiaries you mention are already quiet rich or if the person decides to cash the entire inheritance at one go, the amount of taxes charged might be much higher and a large part of your money might end up going into the government’s fund.
There are two main kinds of annuity beneficiary:
Primary Beneficiary
A primary beneficiary is the person or persons who are first in line when it comes to inheritance of the annuity amount post the annuity owner’s death. An annuity owner can name one or more persons as the primary beneficiary in his annuity contract. In case of more than 1 beneficiary, the owner can specify what percentage of the annuity amount each is one supposed to receive.
Secondary Beneficiary
A secondary beneficiary is one who act as the back up line of inheritors in case the primary inheritors are no longer alive. They are more like a contingency plan that comes into effect when the first line of inheritors is not able to inherit the annuity amount.
An annuity holder can name two or more people as his beneficiaries in his annuity contract.
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What you need to know regarding annuity beneficiary designations regarding retirement and non qualified accounts
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