An annuity may be defined as having:
- an owner (the person who buys the annuity contract and names the other participants)
- an annuitant (the person who receives the income if the contract is converted to generate income)
- an owner’s beneficiary (the person receiving the death benefit if the owner dies)
- an annuitant’s beneficiary (the person who receives the death benefit if the annuitant dies).
It is also possible to have joint owners and joint annuitants.
Depending on who gets which benefit, an annuity contract is said to be:
- Owner-driven, if the annuity death benefit passes to the owner’s beneficiary upon the death of the contract owner. If the annuitant dies, the owner simply continues with the contract without any other effect.
- Annuitant-driven, if the death benefit passes to the annuitant’s beneficiary upon the death of the annuitant. Upon the death of the owner, the owner’s beneficiary receives the contract value (possibly less than the death benefit).