Term Certain Annuity


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.


Loading the player...

BREAKING DOWN '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.

  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Fixed Annuity

    An insurance contract in which the insurance company makes fixed ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Tax Deferred

    Investment earnings such as interest, dividends or capital gains ...
  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. Retirement

    What Is An Annuity?

    These contracts provide a guaranteed income stream. Learn how annuities work and their benefits.
  5. Investing Basics

    Calculating The Present And Future Value Of Annuities

    Here's everything you need to account for when calculating the present and future value of annuities.
  6. Insurance

    Avoiding The Modified Endowment Contract Trap

    To avoid MEC status, flexible-premium policies must cap the amount that can be paid into the policy over a period of seven years.
  7. Investing Basics

    Pairing Annuities and Target Date Funds: Top Tips

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

    Federal Deposit Insurance Corporation (FDIC)

    The Federal Deposit Insurance Corporation (FDIC) insures deposits in banks and thrift institutions.
  9. Economics

    How Does Reinsurance Work?

    Reinsurance is a practice in which insurers transfer portions of portfolios to other parties in order to reduce their exposure to claims.
  10. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  1. Does renters insurance cover personal injuries?

    Renters insurance provides two main forms of coverage – liability and contents insurance – and they are offered together ... Read Full Answer >>
  2. Does renters insurance cover jewelry?

    Renters insurance provides personal property coverage that covers your personal property – including jewelry – in case of ... Read Full Answer >>
  3. Why might landlords require renters insurance?

    Landlords can require renters insurance to lower their own liability and insurance costs. According to data from the Insurance ... Read Full Answer >>
  4. How liquid are variable annuities?

    Variable deferred annuities and variable immediate annuities are not considered liquid. Variable deferred annuities carry ... Read Full Answer >>
  5. Do variable annuities have RMDs?

    Variable annuities are not subject to required minimum distributions (RMDs) unless they are held in qualified plans, such ... Read Full Answer >>
  6. Can variable annuities be rolled into an IRA?

    Variable annuities are often found in government or nonprofit employer retirement plans such as 403(b) or 457(b) plans. With ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center