What Happens to Your CenterPoint Annuity When You Die

Your annuity does not disappear when you die — it passes to whoever you named as beneficiary, but the exact payout depends on which CenterPoint product you own and the options you chose when you bought it.

CenterPoint Energy is a utility company, not an annuity issuer. If you own an annuity and work for CenterPoint or receive a pension from them, your annuity is likely through a separate financial institution — often Fidelity, Vanguard, or an insurance company. The death process works the same way regardless: your beneficiary contacts the company holding the annuity, provides a death certificate, and receives the remaining value according to your contract terms.

The amount your beneficiary receives depends entirely on what type of annuity you own and what payout option you selected. A fixed annuity with a life-only option pays nothing to heirs — the payments stop when you die. A fixed annuity with a period-certain option or a joint-and-survivor option continues paying your beneficiary for the remaining years or for their lifetime. Deferred annuities held until death pass their full account value to your beneficiary, minus any surrender charges if you had not yet reached the surrender-free date.

Key Takeaways

• Your beneficiary receives whatever remains in your annuity contract according to the payout option you chose — life-only pays nothing to heirs, while period-certain and joint-and-survivor options continue paying your beneficiary.
• You must name a beneficiary on your annuity contract; if you do not, the money goes through probate and may take months or years to reach your heirs.
• Your beneficiary will need an original or certified death certificate and your annuity contract number to start the claim process with the company holding your annuity.
• If you own a deferred annuity that has not yet started paying, your beneficiary receives the full account value, though they may owe income tax on the growth.
• Some annuities allow your beneficiary to stretch withdrawals over their lifetime, while others require a lump-sum payout — check your contract to know which applies.

How beneficiary designation works with annuities

When you bought your annuity, you filled out a form naming one or more beneficiaries. That designation is what controls where the money goes after you die — not your will, not probate court, and not state law. The annuity company has a record of this on file and uses it to pay out your account.

If you named a specific person or people, they receive the payout. If you named your estate as beneficiary, the money enters probate and your heirs receive it only after the court process finishes — often six months to two years later. If you never named a beneficiary, the annuity company follows state law, which usually means your spouse gets it first, then your children, then your parents. This process is slower and more complicated than a direct beneficiary payout.

You can change your beneficiary at any time while you are alive by contacting the company holding your annuity. If your life circumstances have changed — you divorced, remarried, had children, or want to name a charity — update your beneficiary form now rather than leaving confusion for your heirs later.

Payout options and what your beneficiary receives

The amount your beneficiary gets depends on which payout option you selected when you bought the annuity. Most annuity contracts offer several choices, and you picked one. Understanding which one you chose is the key to knowing what happens after you die.

Life-only option: You receive payments for as long as you live, and the payments stop completely when you die. Your beneficiary receives nothing. This option pays the highest monthly amount because the insurance company knows it will not have to pay after you pass away. Choose this only if you have no heirs you want to provide for.

Period-certain option: You receive payments for a set number of years — commonly 10, 15, or 20 years. If you die before that period ends, your beneficiary receives the remaining payments in a lump sum or in installments, depending on your contract. If you live past the period, payments stop and your beneficiary receives nothing. This option balances income for you with some protection for your heirs.

Joint-and-survivor option: Payments continue to your surviving spouse or other named beneficiary for their lifetime after you die. The monthly payment is lower than life-only because the insurance company expects to pay longer. This is common for married couples who want to may support the surviving spouse has income.

Deferred annuity with no payout started: If you bought an annuity but had not yet started taking payments, your beneficiary receives the full account value — the amount you invested plus any growth. They may owe income tax on the growth portion, but they receive the full balance.

Steps your beneficiary should take after your death

Your beneficiary does not need to do anything when ready, but they should contact the annuity company within a few weeks of your death. Here is what they will need and what to expect.

First, your beneficiary needs to locate your annuity contract or policy document. This shows the company name, your policy number, and the payout option you chose. If they cannot find it, they can search your financial records, email, or ask your accountant or financial advisor. The company name is usually printed on any statements you received.

Next, they contact the company directly — by phone, mail, or online, depending on the company's process. They provide your name, policy number, and their relationship to you. The company will ask for an original or certified copy of your death certificate. Your beneficiary can obtain this from the county clerk or vital records office in the county where you died, usually for $10 to $30 per copy.

The company will then verify the death, confirm the beneficiary designation on file, and explain what payout your beneficiary is may have access to to receive. If your contract allows it, your beneficiary may choose to receive a lump sum, monthly payments, or a combination. The company will provide tax forms (usually a 1099-R) showing how much of the payout is taxable income.

Processing typically takes two to four weeks after the company receives the death certificate. Some companies are faster; others slower. Your beneficiary can ask for an estimated timeline when they first contact the company.

Tax consequences for your beneficiary

Your beneficiary will owe income tax on some or all of what they receive, depending on the type of annuity and how much of the payout is growth versus your original investment.

If you owned a deferred annuity (one you had not started withdrawing from), the growth inside the annuity was never taxed while you were alive. When your beneficiary receives it, they owe income tax on the growth portion. The amount you originally invested is not taxed again. The company will send a 1099-R form showing the taxable amount.

If you owned an when ready annuity or were already receiving payments, each payment you received included a portion of your original investment (which is not taxed) and a portion of growth (which is taxed). Your beneficiary continues receiving the same split. The company has already calculated this and will show it on the 1099-R.

Your beneficiary reports the taxable portion on their own tax return for the year they receive the payout. If they receive a large lump sum, they may owe a significant tax bill that year. Some beneficiaries choose to take payments over time instead to spread the tax across multiple years — if the contract allows it.

What happens if you name your estate as beneficiary

If your annuity beneficiary form lists your estate instead of a person, the annuity does not go directly to your heirs. Instead, it becomes part of your probate estate, and the court distributes it according to your will or state law.

This process is slower — typically six months to two years — and more expensive because probate involves court fees and attorney fees. Your heirs may also face delays if your will is contested or if there are creditor claims against your estate. The annuity company will still require a death certificate and proof that probate has been opened, but the money goes to the probate court, not directly to your beneficiaries.

Naming your estate as beneficiary makes sense only in rare situations, such as if you want the annuity to pay off debts before your heirs receive anything. In most cases, naming specific people as beneficiaries is faster and simpler.

Frequently Asked Questions

Can my beneficiary stretch out the annuity payments over their lifetime?

It depends on your contract and the company. Some annuities allow beneficiaries to take payments over their life expectancy, while others require a lump-sum payout within a set time frame (often five years). Check your annuity contract or ask the company holding your annuity what options your beneficiary will have. This is worth clarifying now so your beneficiary knows what to expect.

What if I named someone who has died since I bought the annuity?

The annuity company will not pay that person. Instead, the money goes to your alternate beneficiary if you named one, or to your estate if you did not. Contact the company when ready to update your beneficiary designation. If you have already died, your heirs may need to work with the company to clarify who should receive the payout based on your contract terms.

Do I owe estate tax on my annuity?

Federal estate tax applies only if your total estate exceeds a very high threshold — $13.61 million in 2024, though this amount changes yearly and may be lower in future years. Most people do not owe federal estate tax. Some states have their own estate or inheritance taxes with lower thresholds. Your beneficiary should consult a tax professional if your total estate is large.

What if the annuity company cannot find my beneficiary designation?

If the company has no record of a beneficiary on file, the money goes to your estate and enters probate. This is why it is important to keep a copy of your beneficiary form and to confirm with the company every few years that their records are correct. If this happens after your death, your heirs may need to hire an attorney to sort out the probate process.

Can my beneficiary refuse the annuity payout?

Yes. Your beneficiary can disclaim the annuity, which means it passes to the next beneficiary you named or to your estate. This is rare but can make sense if your beneficiary does not need the money and wants to avoid the tax bill, or if accepting it would affect their may be able to access for means-tested benefits. They must disclaim within nine months of your death and follow specific legal procedures, so they should consult an attorney if they are considering this.