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Can You Change the Beneficiary on an Annuity?

Stan Haithcock
August 10, 2023
Can You Change the Beneficiary on an Annuity?

The question you're asking today, which is a good one, is can you change the beneficiaries of an annuity? I'm going to cover all types, but the short answer, which is what you want, is yes, you can. You can change the beneficiaries on the annuity. If your kid pisses you off, sorry for my French, you can take them off that annuity as a beneficiary. But I want to go deeper into that and cover some things, give you some examples, and some stories that might apply to you. So, hang in there with me.

Okay, so can you change the beneficiary of an annuity? The answer is a pound the table, yes. If you choose to do business with Stan The Annuity Man, we'll walk you through all the paperwork and take over from start to finish. But part of that application process will involve you telling us who the beneficiaries are of the policy. You can split it up in a myriad of ways. There's no limitation on how many people can be the beneficiary of the policy. In many cases, carriers will allow a trust to be the beneficiary of a policy. But if you have ten kids, you can split it up. And you can split the percentages up any way you want.

Client Example

So recently, the other day, a gentleman bought a bunch of MYGAs—a bunch of Fixed Rate Annuities. But the way he set up the beneficiaries was that the wife was the primary beneficiary, which was a hundred percent. But when she passed, then the kids were what's called contingent beneficiaries. And then what else? He did another thing. There's tertiary, the third level of beneficiaries, were the grandkids.

So let me tell you. This is the way it looks. He owned the MYGAs. There's a bunch of them. The primary beneficiary was the wife, who was at a hundred percent. When he died, as long as she was alive, she gets a hundred percent. But let's say she passes. Then there were four kids. So, the kids, they each were getting 25%. And then, from there, he had ten grandkids, and they would each get 10%.

The way that would work is if Jim's Learjet hits the mountain, the wife gets it all a hundred percent. But if Jim and his wife were in the Learjet together, the kids split it all up, 25% across the board between the four. But let's say the kids were on the plane with Mom and Dad, but the grandkids were with the babysitter. That's kind of morbid but hang in there with me. So, they died too. Then the grandkids would split it. Now you can change the percentages all the time, anytime you want to. And the way you do that is to call the carrier, or if you're our client, we can certainly help you with that and ensure everything's done.

Legal Tender

But you should revisit that all the time. You should know the beneficiary structure and the percentages because it's legal tender. That application's legal tender. That policy is legal tender. But many people think that beneficiaries, that's an irrevocable thing with annuities. It is not. If you have the wondering ambiguity of a kid who makes you mad and goes in a political direction that you're not going and you say, "I'm done with that kid. I'm just going to take him off my policy" You can. You can literally remove them until they get their head together and start thinking straight. I hope that answers the question.

Life Only

We've talked about changing the beneficiary on annuities, and you can, of course. Let me talk about some situations where it makes no sense. Let's talk about life only. If you buy an annuity and it's going to pay life only, so it's an Immediate Annuity, it's life only. What does that mean? That means it will pay for your life regardless of how long you live. But when you die, money goes poof.

Now, many people think that's the only way Immediate Annuities are structured, but they're not. You can structure them so that a hundred percent of the principal goes to the beneficiaries, and under that circumstance, you would list beneficiaries. But under a life only, there is no beneficiary because it's all about your life, and when you die, money goes poof.

Now people say, why would you do that? I guess if you hated your kids, your beneficiaries, or if you didn't have any, you'd do that. The second reason you do life only is that it would be the highest contractual payout you can get. Why? Because you're shouldering some of that risk. In other words, you're saying give the highest payment. And I understand that when I die, money goes poof, and in this case, whatever's left is kept by the annuity company, but they are paying you the highest guarantee available.

So, in this case, life only SPIA or life only DIA, Deferred Income Annuity, which is an Immediate Annuity, or life only QLAC, Qualified Longevity Annuity Contract. In those situations, money goes poof when you die. And so, the beneficiaries, it doesn't apply. If you have beneficiaries and you're going to choose a life only structure, my advice to them would be to have that conversation. Because if those beneficiaries call Stan The Annuity Man after you die, and you bought the annuity through me, I'm going to nicely and professionally tell your beneficiaries, "Hey, I'm sorry. That's what he wanted. Life only."


So, beneficiaries. Love them, hate them. We all have them. Now you know you can change it. With most of the annuities out there, it's revocable. Not irrevocable. You can change it. I recommend watching this video called "When's the best time to buy an annuity." It's not when the agent tells you to. It's not when the agent needs a car payment made. It's when you need to transfer risk. But in that video, I go through when those times occur and what you can do to contractually solve for that goal. How to go about it in myriad ways, either a laddering approach or a lump sum. So, I cover that. I encourage you to go to that and take a look at that video. In fact, I release a brand new video every day of the week, Monday through Friday, so subscribe to my YouTube Channel. And if you want to see specific quotes or connect with us on the phone and have us make a plan for you, there is no obligation, no cost. You can even download my free annuity owner’s manuals for free by clicking here.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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