Temporary Life Annuity

What Does Temporary Life Annuity Mean?

A temporary life annuity provides regular payments to the annuitant either until a predetermined expiration date is reached or until the annuitant passes away, whichever comes first.

Insuranceopedia Explains Temporary Life Annuity

Most annuity contracts either have a fixed expiration date or provide payments for life. A temporary life annuity, however, combines both features, typically resulting in fewer payments compared to a standard annuity. Consequently, it usually costs less. Buyers often weigh this lower cost against the average cost of a life insurance policy when deciding how to structure their retirement income.

That said, the annuitant must ensure they have a source of income after the temporary life annuity ends. This type of annuity is ideal for someone who retires early and needs supplemental income until they become eligible to collect benefits like Social Security. Anyone using one to bridge the gap until retirement age should also review their life insurance options for seniors, since the two products often work together in a retirement plan.