What is a 10 year certain and life annuity?

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Quick Answer

The company pays income for as long as you live and guarantees to make payments for a set number of years even if you die. This period certain is usually 10 or 20 years.

How a 10 year certain and life annuity pays

The company pays income for as long as you live and guarantees to make payments for a set number of years even if you die. This period certain is usually 10 or 20 years. If you live longer than the period certain, you’ll continue to receive payments until you die.

What your beneficiary receives

If you die during the period certain, your beneficiary gets regular payments for the rest of that period. If you die after the period certain, your beneficiary doesn’t receive any payments from your annuity.

Why the payment is smaller than life only

Because the “period certain” is an added benefit, each income payment will be smaller than in a life-only option. Life Only: The company pays income for your lifetime. It doesn’t make any payments to anyone after you die. This payment option usually pays the highest income possible.

What sets the size of the payment

The size of income payments is based on the accumulated value in your annuity and the annuity’s benefit rate in effect when income payments start. The benefit rate usually depends on your age and sex, and the annuity payment option you choose.

Video: What is a 10 year certain and life annuity?

About this video

In this short video, Jeffrey Scott McLeod, LUTC explains a life annuity with a 10-year guaranteed period through a real client story. He opens with research he cites from LIMRA showing that most people spend an entire inheritance within 18 months, then shows what an annuity owner can do about it: open the contract to the middle, find the annuity payout option tables, and call the company to ask whether it has a form called restricted beneficiary payout options. Some companies will not use that form for a spouse, an estate, a charity or a trust. His client has a 55-year-old son who is financially irresponsible and has children, so she is using the form to control how her money is paid out. When she dies, it turns into a life income with a 10-year guaranteed period. If the son is 65 when the income starts, Jeff shows a figure of $3.75 per month per thousand from the 2012 tables most insurance companies use. If the son dies five years into the payments, his children receive the remaining five years of the guarantee. If he lives longer, it is a lifetime payout.

That is how the Buyer’s Guide describes a life annuity with period certain: income for as long as you live, plus payments guaranteed for a set number of years even if you die. Because that guarantee is an added benefit, each payment is smaller than a life-only payment.

Receive your free NAIC Buyer’s Guide to Fixed Deferred Annuities at annuitiesexplained.org/get-your-free-consultation-with-me/. Watch short educational videos at youtube.com/@AnnuitiesExplained. Contact Jeffrey Scott McLeod, LUTC for personalized guidance tailored to your state.

Questions & Answers

Question	Answer
How long does a 10 year certain and life annuity pay?	The company pays income for as long as you live and guarantees to make payments for a set number of years even if you die. This period certain is usually 10 or 20 years.
What if I live longer than the 10 years?	If you live longer than the period certain, you’ll continue to receive payments until you die.
What if I die during the 10 years?	If you die during the period certain, your beneficiary gets regular payments for the rest of that period.
What if I die after the 10 years?	If you die after the period certain, your beneficiary doesn’t receive any payments from your annuity.
Why is the payment smaller than a life-only payment?	Because the “period certain” is an added benefit, each income payment will be smaller than in a life-only option.
How is the payment amount figured?	The size of income payments is based on the accumulated value in your annuity and the annuity’s benefit rate in effect when income payments start. The benefit rate usually depends on your age and sex, and the annuity payment option you choose.

Large Print Version

What is a 10 year certain and life annuity?

The company pays income for as long as you live and guarantees to make payments for a set number of years even if you die. This period certain is usually 10 or 20 years.

How long does a 10 year certain and life annuity pay?

The company pays income for as long as you live and guarantees to make payments for a set number of years even if you die. This period certain is usually 10 or 20 years.

What if I live longer than the 10 years?

If you live longer than the period certain, you’ll continue to receive payments until you die.

What if I die during the 10 years?

If you die during the period certain, your beneficiary gets regular payments for the rest of that period.

What if I die after the 10 years?

If you die after the period certain, your beneficiary doesn’t receive any payments from your annuity.

Why is the payment smaller than a life-only payment?

Because the “period certain” is an added benefit, each income payment will be smaller than in a life-only option.

How is the payment amount figured?

Annuities Explained is not affiliated with or endorsed by the National Association of Insurance Commissioners (NAIC).

Educational content provided by Jeffrey Scott McLeod, LUTC, National Insurance Producer License #558629. This is for informational purposes only and is not a recommendation to buy or sell any annuity. Guarantees are subject to the claims-paying ability of the issuing insurance company. Always consult your own advisor and read the full NAIC Buyer’s Guide. For residents of your state.

Jeffrey Scott McLeod, LUTC — Texas License #901162 (National Producer #558629).
Questions? Contact Jeff@AnnuitiesExplained.org.