What Is a Contingent Annuitant?

A contingent beneficiary may be an important consideration as you get ready for retirement.

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A contingent annuitant is the person who would be in line to receive your retirement pension check when you pass away. A contingent annuitant can also be added to a privately purchased annuity. In most cases, you select how much the survivor will be paid if you pass away first. Once your pension or annuity payments start, the contingent annuitant cannot be changed, so consider your options carefully.

Lifetime Income Payments

The basic function of a retirement pension or annuity is to make monthly payments for as long as the retiree lives. When the person dies, the obligations of the pension plan or annuity company are finished and the payments stop. The individual may live for just a few years after retiring or until well past age 100, and the promise of this type of income stream is that the payment will come every month. Problems can arise if two people are dependent on the income stream that will stop if one of them dies.

Contingent Annuitant

If a contingent annuitant is added to a retirement pension or annuity, the payments continue if a second person -- the named contingent annuitant -- is alive after the retiree dies. The contingent annuity turns a single-life annuity stream into a two-life annuity stream, and the payments do not stop until the second person has passed away. The contingent annuitant is typically the spouse or domestic partner.

Contingent Annuitant Options

When you add a contingent annuitant to your retirement payments, the amount of your monthly payment is reduced to cover the potential cost of paying benefits after you have died. The annuity or pension company will provide income options for the contingent annuitant at different levels. The surviving annuitant can typically be set up to receive 50, 75 or 100 percent of your retirement benefit. The higher the benefit the contingent annuitant receives, the lower your own pension or annuity payment will be.

Irrevocable Choices

When you name a contingent beneficiary and select a payout option for the beneficiary, your decision cannot be changed once you start to receive pension or annuity payments. Compare all of your financial options before making a final decision. If the contingent annuitant dies first, you may or may not have the option of naming a new contingent beneficiary. Again, check the specific plan rules before making any decisions.