Can an Annuity Be Set Up to Go to Your Children at Your Death?

Annuities are primarily used as a means of securing a steady cash flow during your retirement. If you're worried about what will happen to the money in an annuity if you die, you can set it up with your children as beneficiaries who will then receive the money. Many insurance companies offer annuities and the beneficiary setup process is the same. Payout procedures may vary with the annuity.

Annuity Setup

To name your children as beneficiaries of an annuity when setting it up, fill in their names on the form provided by the insurance company or financial institution offering the annuity contract. Some annuities allow you to include the percentages of distribution you desire -- divide the annuity evenly between your children or designate different amounts for each child. In most cases, you can change the beneficiary options later if your family conditions change. Most annuities give you payout options of a lump sum or periodic payments when you retire. The annuity may also give your beneficiaries an option to change the payout conditions when you die.

Die Before Retirement

You might still be making payments into the annuity if you die before you retire. Your beneficiaries, in turn, might have the option to withdraw the accumulated balance or to continue making the payments and roll the sum into new annuities for their own retirement plans. The setup options vary with the insurance company or financial institution. Check with your agent for the exact options available when you set up your annuity.

Die After Retirement

You might be receiving payments from the annuity, have chosen to start the payments or to receive a lump sum at a later date if you die after retirement. No matter how the annuity payments are designated to you prior to death, the remaining accumulated balance belongs to the annuity's beneficiaries. Depending on the conditions of the annuity, the beneficiaries may receive the money as a lump sum or as periodic payments. They may also have the same rollover options available if you had died before retirement.

Contingent Beneficiaries

The primary beneficiaries you name on an annuity contract or application form are the persons who will receive the money when you die. Naming a contingent beneficiary gives instructions on who to give the money to if your primary beneficiary dies before or at the same time you do, such as in an automobile accident. Additional beneficiaries may be added to cover the case of the contingent beneficiaries dying also.

About the Author

Richard Asmus was a writer and producer of television commercials in Phoenix, Arizona, and now is retired in Peru. After founding a small telecommunications engineering corporation and visiting 37 countries, Asmus studied broadcasting at Arizona State University and earned his Master of Fine Arts at Brooklyn College in New York.

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