Life with period certain pays income for as long as you live, and it also guarantees a set minimum number of years of payments to a beneficiary if you die early in the contract.
What is life with period certain?
Life with period certain blends two protections into one payout choice. Like a single life annuity, it keeps paying you for as long as you are alive. On top of that, it locks in a minimum number of years of payments that go to a named beneficiary if you die before that stretch is finished. It sits between the pure lifetime guarantee of a single life payout and the legacy focus of a straight period certain.
How life with period certain works
If you outlive the certain period, nothing changes for your beneficiary. The certain period simply passes with no additional payout tied to it, and your income keeps arriving as long as you live. But if you die while the certain period is still running, whatever is left of it goes to your beneficiary. Die in year 5 of a 10 year certain period, for example, and your beneficiary collects the remaining years, six through ten. This closes the biggest gap in a plain single life payout, where dying in the first year would otherwise let the carrier keep the full premium.
Common period certain lengths
Carriers typically offer certain periods of 5, 10, 15 or 20 years. Choosing a longer certain period lowers your starting monthly payment, since the carrier is guaranteeing more years of payout regardless of how long you live. To illustrate, a 65 year old man buying a $100,000 single premium immediate annuity might see roughly $555 a month with a 10 year certain period, about $530 a month with a 20 year certain period, or close to $580 a month with no certain period at all. Most retirees settle on 10 or 15 years, long enough to matter to a beneficiary without shrinking the monthly check too much.
When to choose this payout
This structure is a natural fit when you want income for life but do not want to risk leaving your heirs empty handed if you die soon after starting payments. If leaving a guaranteed total amount behind matters more to you than maximizing lifetime income, look instead at a refund annuity, which is built around that goal directly.
Frequently asked questions
What does life with period certain mean?
It is a payout option that pays you for the rest of your life while also promising a beneficiary a minimum stretch of payments if you die before that guaranteed period ends.
What happens to the payments if I pass away early?
Say you picked a 10-year certain period and pass away in year 5. Your beneficiary would then receive the payments for the remaining years, six through ten, rather than the contract simply ending.
How do I decide on this payout?
Choose it when lifetime income matters to you but you also want to protect against leaving nothing behind if you die soon after payments start. If a guaranteed total payout matters more than lifetime income, a refund annuity may fit better.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.