Whose life expectancy is primarily considered in an annuity?

The life expectancy that's primarily considered in an annuity is that of the annuitant. In the context of an annuity, the annuitant is the individual whose life is measured to determine the payment duration. An annuity agreement generally involves the insurer making payments to the annuitant during their lifetime or for a predetermined period.

The payments depend on the annuitant's life expectancy because the insurance company calculates the risk and makes decisions based on how long they anticipate making those payments. For example, if an annuitant has a longer life expectancy, the insurance company might structure the payouts to be smaller over a more extended period.

Other stakeholders, like the policy owner and beneficiary, can also be involved in the contract but do not directly impact the calculation of payment schedules in the same way the annuitant does. The policy owner is the entity that purchased the annuity but may not necessarily be the one receiving the payments or considering the life expectancy for the terms of the annuity. The beneficiary is someone designated to receive benefits upon the annuitant's death, but they are not the focus during the annuity's life expectancy assessments.