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June 17, 2010

What Does Certain and Life Annuity Mean? Annuity 101

by John Darer® CLU ChFC MSSC CeFT®  RSP CLTC

With baby boomers and retirees seeking stable guaranteed income these days and others appreciating it, it's more likely than not that they will at some point consider annuities.

Some annuity terms and phrases like "certain and life"can be confusing and I want to help ease your pain here.

This post is the beginning of a multi-part  Annuity 101 series that will be helpful to anyone considering annuities, whether you are a retiree or getting close to retirement; or you are a personal injury plaintiff or a claimant in a wrongful death action looking at a structured settlement annuity; or a seller of high value low basis property or seller of a business considering a structured installment sale; a plaintiff attorney or law firm who is contemplating structuring legal fees; or a celebrity who is looking to structure endorsement fees.

So what does "certain and life" mean? 

You may encounter annuity proposals which state "X$ per month certain and life" or "X$ per year for life with 30 years certain" or simply "X$ per month for 10 years certain". Simply put the certain period represents the number of years that will be paid whether or not the measuring life survives the entire payment schedule.

A certain period is sometimes mislabeled a guarantee period. While the terms would be synonymous if the annuity were to pay for a fixed period certain, the misnomer comes when the annuity includes a lifetime benefit.

The reason it's a misnomer is fundamental to what an annuity is. An annuity is an insurance contract guaranteed by the full faith and credit of the insurance company that issues it. With a lifetime benefit the benefits  ARE CONTRACTUALLY GUARANTEED.

Even an annuity that has no certain benefit such as a lifetime only annuity is contractually guaranteed.

This misnomer can lead to documentation errors. It is better to use the term "period certain" to describe payments that will be made "come rain or shine" whether living or not.

Ben_franklin_feather_declaration_md_clr With all due respect to Ben Franklin, the continued parroting of an 18th Century saying " nothing can be said to be certain except death and taxes",  is inaccurate today because for people who qualify for some structured settlements the only thing certain is death and their annuity payments.

Look for more episodes of our Annuity 101 information series coming soon.

in the meantime, click the following link for more information and explanation of the types of structured settlement payments, or visit the glossary of structured settlement settlement terms,keywords and phrases for settlement planning and financial planning terms at 4structures.com

 

 

Posted at 08:52 PM in 4structures.com, LLC, Albany New York Structured Settlements, Annuity 101, Annuity FAQ, Annuity Terms, Bowling Green Kentucky Structured Settlements, Bridgeport Structured Settlements, Bronx New York Structured Settlements, Brooklyn New York Structured Settlements, Buffalo New York Structured Settlements, Certain and Life, Chicago Illinois Structured Settlements, Connecticut Annuities, Missouri Structured Settlements, NC Structured Settlements, New Jersey Structured Settlements, New Orleans Louisiana Structured Settlements, New York Annuities, New York City Structured Settlements, New York Settlement Planning, New York Structured Settlements, Newark NJ Structured Settlements, Newburgh Structured Settlements, NH structured settlements, NJ Structured Settlements, North Carolina Structured Settlements, NYC Structured Settlements, Orange County Structured Settlements, Orlando Florida Structured Settlements, Philadelphia PA Structured Settlements, Providence Rhode Island Structured Settlements, Rhode Island Structured Settlements, Rochester Structured Settlements, Sacramento Structured Settlements, San Francisco Structured Settlements, Santa Monica Structured Settlements, Sarasota Structured Settlements, St. Louis Structured Settlements, Structured Settlement Definitions, Structured Settlement FAQ, Structured Settlement Information, Structured Settlement Payments, Structured Settlements 101, Structured Settlements Essentials, TX structured settlements, VA Structured Settlements, Washington Structured Settlements, West Virginia Structured Settlements, White Plains Structured Settlements, WV Structured Settlements |

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Guide to Structured Settlements 2024

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  • What Are Structured Settlement Annuities?
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  • History of Structured Settlements
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  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
  • iStructure |Uncapped Fixed Index Structured Settlement Annuity
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Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
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  • Firmwide Qualified Settlement Funds Debunked
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Why Take a Structured Settlement?

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