Years Certain Annuity
What Does Years Certain Annuity Mean?
A years certain annuity is an insurance product that provides the policyholder with a fixed monthly income for a designated number of years, regardless of how long the policyholder lives. If the policyholder dies within the selected time frame, the beneficiary named in the policy will continue to receive annuity payments until the expiration date.
The years certain annuity is also known as a term certain annuity or a period certain annuity.
Insuranceopedia Explains Years Certain Annuity
Many people prefer purchasing a life annuity, which provides payouts for the duration of the policyholder’s life. However, the advantage of a years certain annuity is that it offers larger monthly payouts for a designated number of years. This type of annuity also carries certain risks, such as the possibility of the policyholder outliving the designated payment period. For this reason, individuals typically purchase a years certain annuity only when they are confident they will have another source of income during their retirement years.
