Period Certain

What Is Period Certain?

Period certain is a annuity option that permits the customer to pick when and how long to receive payments, which beneficiaries can later receive. This is not normal for the more conventional life, lifetime or pure life annuity option, in which the annuitant receives an income payment until the end of their life, paying little heed to how long their retirement lasts.

A period certain annuity is likewise portrayed as an "income for a guaranteed period." The insurance companies that make and market annuity products can utilize different names and portrayals.

Understanding Period Certain

By choosing the period-certain annuitization option, the annuitant is generally able to receive a higher regularly scheduled payment than with a life option. This extra income accompanies a price, however; the risk that the annuity payments will run out before the annuitant's death (longevity risk). For instance, say a 65-year-old annuitant chose to begin getting payments from their annuity and picked a 15-year period-certain payout option. This would furnish them with a retirement income until the age of 80.

Should the annuitant bite the dust at or before age 80, this option wouldn't present a problem, yet would it be advisable for them they live longer than 80 years and not have one more source of retirement income, this option could demonstrate risky.

Period Certain versus Pure Life Annuity

A pure life or lifetime annuity pays a benefit to the annuitant til' the very end. The deceased's estate or beneficiary will receive no benefits after that point. With such an annuity, there is no risk of outlasting the retirement income they give.

By picking a period certain option in a life, guaranteed or certain annuity the annuitant can determine when the benefit will begin and how long it will last to fit it to their retirement and estate planning needs, as well as their lifespan expectations. With a period certain option the deceased annuitant's estate or beneficiary might in any case receive annuity payments until the time period determined inside the period certain terminates. Common periods for a period certain annuity are 10, 15, or 20 years.

Period Certain Plus Life Annuity

A hybrid product joins a period certain annuity with a life annuity and is called "income for life with a guaranteed period certain benefit" (likewise alluded to as "life with period certain"). This strategy gives a guaranteed payout to life that has a period certain phase. On the off chance that the customer (annuitant) kicks the bucket during the certain period phase, their beneficiary receives the remainder of payments for that period.

Features

• This can be stood out from a guaranteed lifetime annuity that pays out until the annuitant kicks the bucket, which is an uncertain period of time.
• A period certain annuity pays out cash flows during the annuitization phase for a set number of years.
• Due to the certainty with a period certainty option, these generally pay out higher month to month or annual cash flows than a life annuity.