Certain and Continuous
What Is Certain and Continuous?
Certain and continuous alludes to a type of annuity that guarantees a number of payments, even if the annuitant passes on. In the event that the annuitant dies during the guaranteed period, a predetermined beneficiary will receive the other payments. On the other hand, in the event that the annuitant outlasts the predetermined number of guaranteed payments, the person would keep on getting income payments forever; in any case, no payments would be accessible for the beneficiary.
Understanding Certain and Continuous
Certain and continuous annuities are a type of guaranteed annuity where the annuity issuer is required to make payments for basically a predefined number of years. A common model is a 10-year certain and continuous annuity.
In such a situation, regularly scheduled payments are paid to the annuitant forever. In the event that the annuitant bites the dust, the designated beneficiary would receive any regularly scheduled payments until the end of the "certain" period — in this case, 10 years. In any case, assuming the annuitant lives past the 10-year period, they will keep on getting regularly scheduled payments forever; be that as it may, after the 10-year period, the beneficiary would as of now not be eligible for regularly scheduled payments.
At the point when you annuitize to make payments, the income stream is a combination of a return of principal and interest. With lifetime income annuities, income not entirely settled by life anticipation at the time payment is received, in combination with current interest rates.
Fundamentally, annuitants place a bet with the annuity company that they will reside longer than the company projects they will reside. On the off chance that the annuitant truly does live longer, the insurance company takes on the obligation and must proceed with payments until the end of the annuitant's life. All in all, annuities give insurance to longevity risk. That is called [transferring risk](/move risk), and it's a one of a kind advantage that no one but annuities can offer.
Two Types of Certain and Continuous Annuities
Certain and Continuous Only
An annuitant doesn't need to connect a life contingency when they annuitize. All things being equal, they can pick a specific period of time for the payments to happen. For instance, a 20-year certain and continuous annuity will pay for a considerable length of time, and afterward payments will stop. The briefest certain and continuous annuity is normally five years.
Life with Certain and Continuous
This type of annuity actually gives a lifetime income stream, yet the annuitant can pick the base amount of years that they or their beneficiaries will receive payments. For instance, life with 10-year certain and continuous implies that you will be paid however long you live. Nonetheless, assuming you pass on in year three, your beneficiaries will receive seven additional years of payments. On the off chance that you live beyond 10 years, there will not be anything left for your beneficiaries when you kick the bucket.
Features
- In a certain and continuous annuity, the annuity issuer must make payments for a guaranteed number of years, even on the off chance that the annuitant kicks the bucket.
- Be that as it may, after the guaranteed period passes, the beneficiary is at this point not eligible for regularly scheduled payments once the annuitant kicks the bucket.
- On the off chance that the annuitant bites the dust during the guaranteed period, the annuitant's beneficiary will receive the balance of the guaranteed payments.
- Assuming that the annuitant lives past the guaranteed period, they will keep on getting regularly scheduled payments forever.
