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Owner-driven and annuitant-driven contracts convey different rights and obligations to the owners:

  • Owner-driven contracts typically pay the minimum guaranteed death benefit when the owner dies, not the annuitant. Owners have all legal rights and can change the annuitant without tax penalties.

  • Annuitant-driven contracts typically pay the minimum guaranteed death benefit when the annuitant dies; and charges are waived at the annuitant's death. Owners and annuitants can usually be changed after these contracts are issued, as specified in the contract.

Whether an annuity is annuitant-driven or owner-driven is a contractual term, determined by the issuer and not subject to change by the customer or agent at the time of sale. Advisers should know which type of annuity contracts are offered by companies they represent.

While some companies offer owner-driven contracts, mortality assumptions that go into pricing annuity contracts are based on the annuitants, not the owners (thus, companies typically have maximum issue ages for annuitants, but not for owners). By offering annuitant-driven contracts, theoretically, companies can better predict and control for mortality among annuitants; but with no maximum issue age for owners, controlling pricing for mortality of owners is more difficult.


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