Who is the individual whose life expectancy is considered in the annuity contract?

In an annuity contract, the individual whose life expectancy is specifically considered is the annuitant. The annuitant is the person on whose life the payments are based, meaning that the terms of the annuity, including payout amounts and durations, are determined by the annuitant's longevity.

For example, if the annuitant lives longer than expected, the insurer may continue to make payments for a longer period, which reflects the value of the annuity over the annuitant's life. On the other hand, if the annuitant passes away sooner than anticipated, the insurer may benefit financially since they may not have to make payments for the full duration of the expected term.

Selecting the annuitant accurately is crucial since the structure and benefits of the annuity hinge on their life expectancy and the timing of distributions. This is different from the owner of the annuity, who may not be the same person as the annuitant, and the beneficiary, who receives the benefits upon the annuitant's death. The insured typically applies to life insurance policies, which are distinct from annuities.