Example: An attorney in AZ called me a few years ago, wanting to hire me as an expert witness. His client, Barbara, wanted to sue an insurance company and the agent. She and her husband had bought a deferred annuity and because almost everything else they owned was in joint tenancy, they decided that the annuity should be as well. The agent did not advise otherwise, and the insurance company issued the contract that way.
The husband died. Barbara contacted the insurer with a request to surrender the annuity which, she thought, now belonged to her (as surviving joint tenant). The reply she got shocked her and sent her to the attorney. The insurer explained that the beneficiary named in the annuity was the couple's church and that the death benefit would be payable to that church.
When I spoke with the attorney, he insisted that the insurer didn't understand the law. "Property held JTWROS always passes to the surviving tenant, by operation of law," he said. "Yes," I replied. "But annuity death benefits do not pass by operation of law, but by contract. And the contract states that at the death of any owner, the death benefit will be paid to the named beneficiary. In this case, that's the church." There was nothing Barbara could do other than request that the church leadership make a qualified disclaimer.
Had Barbara and her husband each named the other as primary beneficiary, this wouldn't have happened. Some insurers that permit joint ownership by spouses avoid this issue by declaring in the contract something like, "Where this contract is owned by spouses in joint tenancy, the surviving spouse shall be deemed primary beneficiary, notwithstanding any beneficiary designation to the contrary."
But we might ask, why own that annuity jointly in the first place? Many clients want this because they own everything else jointly. If you ask why, you're likely to get, "So that when either of us dies, the other will get the property. But that result could be achieved by making the husband the owner and wife annuitant, or vice versa. Indeed, with that arrangement, the surviving spouse could keep the annuity in force for his/her lifetime, by electing the "spousal continuation" provision permitted by IRC Sect. 72(s)(3) and most, if not all, newer annuity contracts.
Barbara and her husband could have done that and named their church as contingent beneficiary. That would have worked. The agent could have explained that and saved himself a lot of grief.