Personal Finance and Money Management 32 – Characteristics of Certain Term Annuity

As we mentioned in other articles the government only represents about 30% of our retirement income, the company retirement pension plan offers another 30% and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. Now you have reached your retirement age, there are some important investment options for your RRSP or 401k plan. In this article, we will discuss types of certain term annuity.

I. Definition
Certain term annuity guarantees a periodic payment of a predetermined amount for a fixed term. Once the term has elapsed, payment stops, even if the annuitant is still alive. Because of the tax-deferred status of these products, many wealthy investors or above-average income earners choose to purchase term certain annuities for the tax advantages.

II. Payment
Term certain annuities pay varying amounts depending on how much money was used to purchase the annuity. If the term certain annuity is short, then each payment back to the annuitant will be large. If the term is long, then each payment will be small.

III. Benefits of certain term annuity
a) Certain term insurance works best for wealthy people who want to defer taxes on income for a fixed period of time. A term certain annuity contract can sometimes be an option.
b) Individuals who will retire soon and need income coverage during that time.
c) As an alternative to other investments for a short period of time before retirement.
Since the main risk is that you may outlive your term annuity and be left with no money, it is wise to purchase this type of annuity under the guidance of a reputable financial adviser.

I hope this information will help. If you need more information or insurance advices, please follow my article series of the above subject at my home page at:

Kyle J. Norton