What Does Term Certain Annuity Mean?

The concept refers to a certain type of insurance contract which involves periodic and established payments to their annuitants but only for a fixed time-period. This involves that after this fixed period is over, term certain annuities become annulled and there will be no chance for annuitants to get any other payments. So the risk of this product is the possible lack of income if the annuitant is alive after the annuity becomes emptied.

Term certain annuities may be bought gradually by regular insurance premium payments. But there is another option: to buy these products at once, with a lump sum of money. This is characteristic for people who are just about to retire, or who have just become pensioners.

An advantage of this product is its tax suspension status which mainly favours investors.

Term Certain Annuity Explained

One should know that this type of annuity product only has a certain predetermined and limited period of giving payouts to the annuitants. So one might outlive his annuity contract, and therefore can be left without any income. Therefore it is strongly recommended to consult with an annuity expert prior to purchasing such annuity products.