Period Certain

DEFINITION of 'Period Certain'

An annuitization-method option with which the annuitant selects a specific time period for which the annuity income payments will last. This is unlike the more commonly selected life option, with which the annuitant receives an income payment for the rest of his or her life, regardless of how long (or short) their retirement years end up lasting.

BREAKING DOWN 'Period Certain'

By selecting the period-certain annuitization option, the annuitant is usually able to receive a higher monthly payment than with the life option. This extra income comes with a price though: the risk that the annuity payments will run out before the annuitant's death. For example, say a 65-year-old annuitant decided to start receiving payments from his or her annuity, and chose a 15-year period-certain payout option. This would provide him or her with a retirement income until the age of 80. Should the annuitant die at or before age 80, this option would not present a problem, but should he or she be expected to live longer than 80 years and not have another source of retirement income, this option could prove too risky.

RELATED TERMS
  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
  3. Annuitization Phase

    The period when the annuitant starts to receive payments from ...
  4. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
  5. Payout Phase

    The phase in an annuity during which payments are made to the ...
  6. Accumulation Phase

    1. A period of time when an annuity investor is in the early ...
Related Articles
  1. Home & Auto

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  2. Options & Futures

    Getting the Whole Story on Variable Annuities

    Variable annuities are another way to save money tax-deferred - but don't jump in blindly!
  3. Options & Futures

    Selecting The Payout On Your Annuity

    Make sure you understand your options for withdrawing your funds from this complex instrument.
  4. Mutual Funds & ETFs

    Top 4 Royce Funds for Retirement Diversification in 2016

    Discover four of The Royce Funds mutual funds suitable for diversifying retirement portfolios that focus on investing in small-cap companies.
  5. Savings

    What Your Credit Score Means for Your Love Life

    Wondering if your significant other wants to commit and is reliable? The Fed might have the answer.
  6. Retirement

    Early Out: A Realistic Plan to Retire Younger

    If you want to retire ahead of schedule, it'll take some extra planning.
  7. Mutual Funds & ETFs

    Which Fund Share Class is Best for Retirement?

    Mutual funds are a popular investment for retirement. Here's how to choose the best share class when investing in them.
  8. Retirement

    6 Robo-Advisors That Require Little to Start

    There are many well-regarded robo-advisor options that come with minimum investment amounts. Here are snapshots of a handful of them.
  9. Retirement

    Smart Ways to Tap Your Retirement Portfolio

    A rundown of strategies, from what to liquidate first to how much to withdraw, along with their tax consquences.
  10. Saving and Spending

    Social Security: Navigating it with Your Clients

    Many people don’t realize how confusing Social Security can be until they're face to face with taking it. Here's how to talk to clients about it.
RELATED FAQS
  1. I am in my mid thirties and have nothing invested for retirement. Is it too late ...

    It is never too late to start saving for retirement. Even starting at age 35 means you will have more than 30 years to save.The ... Read Full Answer >>
  2. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  3. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  4. What's the difference between Social Security Disability Insurance (SSDI) and Supplemental ...

    Disabled persons can receive payments through two programs: Social Security Disability Insurance and Supplemental Security ... Read Full Answer >>
  5. Where else can I save for retirement after I max out my Roth IRA?

    With uncertainty about the sustainability of Social Security benefits for future retirees, a lot of responsibility for saving ... Read Full Answer >>
  6. Do 401(k) savings earn interest?

    While there is a wide array of investment accounts available to investors, one of the most common for employees is the 4 ... Read Full Answer >>
Hot Definitions
  1. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  2. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  3. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  4. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  5. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center