Colorado Life Producer License Practice Test

Who is referred to as the annuitant in a financial context?

1. A person who pays into an annuity

2. A person who receives benefits from an annuity

3. A financial institution managing annuities

4. A beneficiary of an insurance policy

The correct answer is: A person who receives benefits from an annuity

In a financial context, the annuitant is specifically the individual who receives benefits from an annuity. This person is the one who is designated to receive periodic payments or income from the annuity contract, typically during retirement. The annuitant is a central figure in an annuity arrangement, as the contract is often designed to provide financial security or income after they have made contributions to the annuity over time. While they may have initially invested funds into the annuity, it is their status as the recipient of the income that defines their role. Understanding this distinction is crucial for grasping how annuities function, as the benefits and payments are tailored to the financial needs of the annuitant, often reflecting their life expectancy and specific terms outlined in the annuity contract.