What is Life Annuity with Period Certain?

Annuity and settlements are the compensation procedures of payment offered to the people who have suffered a personal crisis. It is useful to know what is life annuity with period certain definition. A series of payments offered at fixed intervals in the lifetime of one person is what we understand by the term “life annuity”

These products are sold and issued by the life insurance companies to the purchaser (or annuitant). These forms of annuities can be sold in the exchange for a single payment annuity, commonly called an immediate lump sum payment or by a series of regular periodic payments also known as the flexible payment annuity, before the onset of the annuity.

What is Life annuity with period certain: Things to Know

Period certain life annuity is a method of annualization, allowing the claimant to select a certain period of time, for which the annuity payments will last. These method favors the annuitant over the conventional life options selected commonly, that allows the payments for lifetime regardless of the tenure of the retirement years.

“Period Certain” proves advantageous over the life option, as period certain annualization yields higher monthly payments unlike the latter. Breaking down of period, certain life annuity will give a clearer idea about the drawbacks as well that are related with this process.

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Life Annuity with 10 Years Certain

We take an example of a 65 year old person, who decides and choose a 15 year period certain term as payout option, holds some discrepancy. This structure will allow the claimant with a regular income for the next 15 years from the age of 65, adding up to the age of 80, but if the person is expected to live longer than the age of 80 and have not chalked out any other source of income after the age of 80 then this is a huge problem for the claimant as the period certain allows the payment for that certain period of 15 years only.

Life annuity period computed with life annuity calculator, certain are the more benefiting procedure of receiving payments. It is a settlement plan and option that pays a fixed amount regularly as the annuity payment for the life of the annuitant, but unfortunate death before the period certain(say 15 years),then the remaining of the payments as installments are delivered and paid to the annuitant’s contingent payee.

Read more on Fixed Annuities Investments

This holds a lot of advantage of what is life annuity with period certain, as this will allow the claimants to gather the whole amount he/she is entitled to receive, even if unfortunate crisis causes death. Period certain life annuity is a payout option for joint and last survivor annuity, gives out the payment for the remaining life or the period certain, whichever is longer.

Period Certain Life Annuity Advantages:

This form of annuity ensures a stable income even in the retirement years. It is a positive way of producing a predictable income over a long period of time.

This being an insurance product, allows the annuitant to be in direct touch with the insurance company. Easy to carry and understand what is life annuity with period certain, one is entitled to receive regular payments and a statement explaining the total procedures.

Security of this investment is reliable compared to the other types. Stable and predictable the risk factors are lesser in comparison with the rest.

But like the above mentioned drawback, another disadvantage of Life annuity period certain is the person loses the control over the money. The money is basically given to someone else to manage and you receive a monthly check. People like to have control over his/her retirement money, and if you fall in that class then Life annuity period certain may not be a healthy choice for you.