How to Buy an Annuity for Another Person
An annuity has several contractually significant titles: owner, annuitant and beneficiary. The annuity is a contract between the owner and the insurance company where the owner pays the premium(s) for the annuity and the insurance company will pay a benefit to beneficiaries after the death of the annuitant. Often the owner and the annuitant are the same person, but this is not required. You can purchase an annuity for another and even later sell it or gift it.
Other People Are Reading
Instructions
-
-
1
Determine the annuity you wish to purchase. You may want a fixed annuity, which offers a fixed rate of return over time, or a variable annuity that invests money in mutual fund sub-accounts you choose. Of these two basic types of annuities, there are many variations.
-
2
Obtain an annuity account application from the insurance company or a financial adviser that represents the company from which you wish to purchase the annuity.
-
-
3
Fill out the application with yourself as the owner. Provide all your contact information, Social Security number and date of birth, then fill in the annuitant information on the person for whom you are purchasing the annuity. Be sure to include the annuitant's contact information, date of birth and Social Security number. You may also list the beneficiaries. As the owner, this is your decision. Sign the application and date it.
-
4
Send the application in with the premium payment or initial payment.
-
1
Tips & Warnings
Some annuities have a benefit paid if the annuitant is admitted into a long-term care facility. Purchasing an annuity on behalf of an elderly parent that has this provision may be a great option to supplement the cost of long-term care. Ask your adviser about various options that work in this situation.
As the owner, you can maintain the annuity, gift it or sell it. If you do, you may be assessed taxes on the value of the annuity at the time of the gift or sale. Consult a tax adviser as to how this will affect your situation.
