What is a Period Certain Annuity
Jason Stolz CLTC, CRPC
What is a Period Certain Annuity? A period certain annuity guarantees income for a specific number of years—such as 5, 10, 15, or 20 years—regardless of how long the annuitant lives. It’s designed for those who want predictable, time-limited payments, and in most cases, ensures the full period’s payout even if the annuitant passes away early. At Diversified Insurance Brokers, we help clients evaluate how these annuities can complement lifetime income or bridge income gaps between retirement milestones.
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How a Period Certain Annuity Works
The annuity pays a fixed income stream for a chosen term—say, 10 years. Payments continue to beneficiaries if the annuitant dies before the period ends. This structure makes it popular for retirees who want predictable income over a known window, such as covering expenses before Social Security or pension benefits begin.
Common Period Lengths
- 5-Year Certain: Ideal for short-term goals or early retirement bridge income.
- 10-Year Certain: A balanced option offering stability and flexibility.
- 15-Year Certain: Often used for income between retirement age and delayed Social Security.
- 20-Year Certain: Long-term payout with guaranteed family protection.
Advantages of Period Certain Annuities
- ✅ Guaranteed payments for the entire period selected.
- ✅ Beneficiary protection—remaining payments continue if you pass away early.
- ✅ No market risk; income is contractually guaranteed.
- ✅ Predictable, fixed income useful for budgeting or bridging income gaps.
Potential Drawbacks
- ❌ Payments end after the period, even if you live longer.
- ❌ No ongoing growth after the term ends unless paired with other income sources.
- ❌ Typically no inflation adjustments unless combined with a cost-of-living feature.
Who Might Benefit Most
- Individuals retiring early who need bridge income before Social Security begins.
- Those wanting to lock in predictable income without lifetime commitments.
- People wanting to protect beneficiaries during a defined financial phase.
Period Certain vs Lifetime Annuity
A lifetime annuity pays income for life, while a period certain annuity ends after the chosen term. Some contracts combine both options, offering lifetime income with a guaranteed “period certain” minimum to protect beneficiaries. This combination ensures you never outlive your income yet still leave a guaranteed benefit if you pass early.
Coordinating with Other Retirement Income
Period certain annuities are often paired with Social Security, retirement plan rollovers, or investment withdrawals to provide short-term stability while maintaining long-term flexibility. The guaranteed timeline helps create order in income planning.
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FAQs: Period Certain Annuities
What happens if I die before the period ends?
Your beneficiaries will receive the remaining payments for the balance of the term. For example, if you chose 10 years and passed away after 4, payments continue to beneficiaries for the remaining 6 years.
Can I combine a period certain annuity with lifetime income?
Yes. Some annuities offer “life with period certain” options, guaranteeing income for life while ensuring at least a minimum number of payments if death occurs early.
Is the income fixed or variable?
It’s fixed. Period certain annuities pay a guaranteed amount for the selected term, unaffected by market changes.
Can I surrender or cash out early?
Typically no. Once payments begin, they are scheduled for the duration of the term. However, some contracts allow commutation for a reduced lump sum.
Is the income taxable?
Yes. Qualified annuities (funded by pre-tax money) are taxed as ordinary income. Non-qualified annuities only tax the earnings portion of each payment.
Can I add inflation protection?
Yes, in some cases. Adding a COLA rider can help payments keep up with inflation, though it reduces the starting income.
How long can the period be?
Most carriers offer 5-, 10-, 15-, and 20-year terms, though some allow custom durations. The longer the term, the lower each payment, since the total payout is spread out.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
