Term Certain Annuity

AAA

DEFINITION of 'Term Certain Annuity'

An insurance product that guarantees a periodic payment of a predetermined amount for a fixed term. Once the term has elapsed, these products are spent and offer no possibility of any future payments, even if the annuitant is still alive. Annuitants may choose to purchase these products gradually by making periodic payments, or they may make a purchase with a single lump sum payment. Usually, lump sum purchases are made at, or shortly after, the annuitant's retirement.

INVESTOPEDIA EXPLAINS 'Term Certain Annuity'

Term certain annuities make periodic payments to the annuitant over time, but once they're done, they're done. The main risk involved in purchasing a product like this is that you may outlive your annuity and be left with no money to live off of. For this reason, term certain annuities should only be purchased under the guidance of a reputable financial professional.

Because of the tax-deferred status of insurance products, many wealthy investors or above-average income earners choose to purchase term certain annuities for the tax advantages they offer.



VIDEO

RELATED TERMS
  1. Accumulation Period

    1. The phase in an investor's life when he/she builds up his/her ...
  2. Annuity

    A financial product sold by financial institutions that is designed ...
  3. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  4. Fixed Annuity

    An insurance contract in which the insurance company makes fixed ...
  5. Life Insurance

    A protection against the loss of income that would result if ...
  6. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
Related Articles
  1. Bonds & Fixed Income

    Passing The Buck: The Hidden Costs Of Annuities

    These may look like good retirement vehicles, but beware of the fees buried in the fine print.
  2. Bonds & Fixed Income

    Explaining Types Of Fixed Annuities

    Learn about this popular retirement tool, its pros and cons and how annuities work to create a guaranteed regular stream of retirement income.
  3. Home & Auto

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  4. Insurance

    Who are the best-rated life insurance companies in the US?

    Learn about what makes an insurance company the best. Read about the best life insurance companies in the U.S. in 2014, following ratings by Weis.
  5. The Treasury and the IRS have issued new guidance on pairing annuities with target date funds.
    Investing Basics

    Guidance On Pairing Annuities, Target Date Funds

    The Treasury and the IRS have issued new guidance on pairing annuities with target date funds. Here's a look.
  6. Insurance

    What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider when purchasing insurance.
  7. Insurance

    What are the tax implications of a life insurance policy loan?

    Learn the instances in which you are required to pay taxes on a life insurance policy loan, so you can avoid making a costly mistake.
  8. How can investors close to retirement protect the purchasing power of their savings? Here are some tips for near-retirees and their financial advisors.
    Investing News

    Tips To Beat Inflation For Near-Retireees

    How can investors close to retirement protect the purchasing power of their savings? Here are some tips for near-retirees and their financial advisors.
  9. Retirement

    Where else can I save for retirement after I max out my Roth IRA?

    Max out your Roth IRA first, then look to other retirement accounts like 401(k) plans, IRAs and annuities to sock away as much cash as you can for retirement.
  10. Retirement

    Are annuities qualified or nonqualified retirement instruments?

    Learn the basics of annuity investments and the tax-deferral they offer, and discover the differences between qualified and non-qualified annuities.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center