by John Darer CLU ChFC MSSC CeFT RSP CLTC
Annuity.org claims that " if there is no beneficiary on an annuity contract, remaining funds are surrendered to the issuing bank or financial institution".
A far more reliable source of information, the Insurance Information Institute, says
"Annuities can be purchased through insurance agents, financial planners, banks and life insurance carriers. However, only life insurance companies issue (annuity) policies".
Thus the Annuity.org suggestion that funds remaining in an annuity at the death of an annuitant who has not named a beneficiary, are surrendered to the "issuing bank" is just flapdoodle. Banks don't issue annuities. Who "surrenders the remaining funds"?
Beneficiaries For Annuities Other Than Structured Settlement Annuities
Assuming the decedent owned the annuity and died without naming a beneficiary, or if neither the primary nor contingent beneficiaries are living at the time of the annuitant's death, the annuity is included in the decedent's estate and can be used to settle the estate’s debts. If any of the annuity value remains, it is distributed to the decedent’s heirs subject to the decedent's valid will, or in the absence of a will, the decedent's state’s intestate succession laws.
Structured settlement annuities are never owned by the annuitant or payee. Generally they are owned by a qualified assignment company or, in a few cases, the defendant or its insurer. The Annuitant is permitted to name and change beneficiaries, subject to submitting a request to the qualified assignment company or annuity issuer in proper form. There is usually a default provision that provides that in the absence of a named beneficiary, or a living named beneficiary, remaining guaranteed certain payments are paid to the estate of the payee, where they may be used to pay the debts of the estate. Any remaining payments following, are distributed to the decedent’s heirs subject to the decedent's valid will, or in the absence of a will, the decedent's state’s intestate succession laws.
- Naming a beneficiary should be part of the process when applying for an annuity yourself, or when a structured settlement is established.
- Beneficiary designations should be reviewed with changing life circumstances including, but not limited to the death of a spouse, birth of new children or divorce.
- Note that in some cases, such as where there is a Supplemental Needs Trust or Special Needs Trust, the trust, through its trustee may be the irrevocable beneficary. A Commutation Rider established when the structured settlement annuityy was established, may be used to collapse the future paymets to present value and pay the proceeds into thetrust ina lump sum.
Annuity.org is a dangerous place
Annuity.org is a dangerous place for consumers to go when seeking accurate information about annuities or structured settlements because it's cack-handed writers just fail to get it right time and time again.