Life Annuity With Period Certain: How Does This Annuity Work?

Shawn Plummer

CEO, The Annuity Expert

Many people are unaware of what a life annuity with a period certain annuity is. However, knowing about this type of annuity is essential because many people use them, which can be a valuable tool for retirement planning. This guide will explain how a straight life annuity with period-specific works and some advantages and disadvantages that come with it.

What is a Life Annuity with a Period of Certain Annuity

A life annuity with a period certain annuity is a contract that guarantees payments for an annuitant’s entire life along with a guaranteed period, typically 5 to 20 years. If the annuitant dies before the guaranteed period has expired, the payments can be passed to a beneficiary.

What Is A Life Annuity With A Period Of A Certain Annuity?

Helpful Tool: period certain annuity calculator

How Does a Life Annuity with Period Certain Annuity Work?

The life annuity with a specific period provides a life annuity with a guarantee for a certain period. This annuity guarantees a lifetime income, but if the death occurs within the guaranteed period, annuity payments will continue to pay the designated primary beneficiary for the remainder of the period.

What Is A Contingent Annuity?

A contingent annuity is one in which payments are made to beneficiaries only if certain conditions are met. The most common use of contingent annuities is for life insurance and pensions. Death benefits or payments are made only if the insured person is alive or the policyholder dies.

In the case of life with a period of a particular annuity, a beneficiary will inherit the annuity’s death benefit only if the annuitant dies during the guaranteed period (period certain).

Types of Life With Period Certain Annuities

  • Single Life Annuity With Period Certain: A life annuity with a period certain provides lifetime payments for one person with guaranteed income for a specified number of years.
  • Joint Life Annuity With Period Certain: Payments for your lifetime and the lifetime of another person (two persons) with a minimum guaranteed payment period.

Annuities That Offer Period Certain Payouts

Pros and Cons of Life Annuity With Period Certain

Pros

  • The annuitant receives payments for the rest of their life.
  • The owner can set the guaranteed payment schedule. They will know how many payments their beneficiary will receive in case of premature death.

Cons

  • There is no death benefit if the annuitant lives beyond a specific period.
  • The payout earns little to no interest.
  • Owners give up control over their money to the insurance company.

What Do My Beneficiaries Receive When I Die?

If the owner of a Life Annuity with Period Certain dies before the guaranteed period, the beneficiaries will receive the remaining payments until the guaranteed period has passed. The beneficiaries will not receive a death benefit if the owner dies after the guaranteed term.

Helpful tip: Life insurance might be a better option if you want to leave money to your beneficiaries. In some cases, you don’t need to take a medical exam. Instead, use our free tool to shop for quotes for life insurance. Coverage starts at $9.37 per month.

Helpful Tip: If you need a cheap service to set up your entire estate plan, we recommend:

Life Contingent Annuity

Next Steps

A straight life annuity with a specific period can be a valuable tool for retirement planning. Still, it’s essential to understand the advantages and disadvantages before deciding if this is the right option for you. If you have any questions about how this type of annuity works or would like a quote, don’t hesitate to contact us. We’re happy to help!

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Frequently Asked Questions

Which type of annuity guarantees a stated number of payments?

A life annuity certainly provides an income with a guaranteed stated number of payments.

A life annuity with a period certain is characterized as

 A life annuity with a certain period is characterized as a hybrid annuity payment option that provides lifetime payments with guaranteed income for a specified number of years.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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