Definition of Years certain Annuity

The form of annuity in which, the annuity holders got to decide the number of years during which he/she will receive his/her payments. Year certain annuity is like other annuities, as its purpose is to provide a fixed income during retirement, but unlike other annuities it provide income to the annuity holder for predetermined time. Years certain annuity is beneficial because the annuity holder gets higher payments each month.

Explanation of Years certain Annuity

Although year certain annuity is uncommon but it provide much larger monthly payments unlike other annuities such as life annuity. This kind of annuity is most attractive for people who will have additional source of income after retirement. Even though year certain annuity has merits, it also has a major risk. If the annuity holder has only retirement income to spend, it could outlive the monthly payment period and be obligated to spend the remaining retirement years on a reduced income.