Definition - What does Annuity Certain mean?
An annuity certain is a financial instrument used for retirement planning. It provides an income stream for a predetermined number of years, remitted to the annuitant or, in the event of their death before full disbursement, to their estate.
Payments from an annuity certain are made on a fixed and regular schedule, which can be monthly, quarterly, semiannually, or annually.
Insuranceopedia explains Annuity Certain
An annuity certain differs from a life annuity. Both are investment vehicles that will provide post-retirement income to the annuitant, but the life annuity provides payments for the duration of the annuitant's life, rather than a predetermined period. Although the life annuity allows the annuitant to receive payments until their death, there is a risk that they will die relatively young and, therefore, not get a substantial return on their initial investment. With an annuity certain, on the other hand, if the annuitant dies before the date at which their payments will cease, their estate or beneficiary can still benefit from the investment.
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