Certain And Continuous

“In this world, nothing can be said to be certain, except death and taxes,” said founding father Benjamin Franklin. Taxes might also be continuous, but death would probably not be...unless you count dying a thousand deaths before making a big presentation.

Certain and continuous (C & C) refers to a type of annuity that will continue to pay your beneficiary even after your demise.

Let’s start with explaining what an annuity is. For people who are looking for a steady income in retirement, an annuity is an insurance product that will pay you a monthly (or quarterly or yearly) amount based on money you have previously put in. How much you get each payment period depends on the performance of the underlying investments if you choose a variable annuity...while a fixed annuity has a minimum interest rate.
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Let’s say Jeff takes out a fixed C & C annuity with a 10-year guarantee period, and designates his wife Mary as the beneficiary. Unfortunately, four years into the guarantee period Jeff dies, but since it’s a certain and continuous annuity, Mary will receive the same payments for the next six years. However, if Jeff lives beyond the 10-year period, he will continue to receive the monthly payments the rest of his life. If both spouses want to ensure they have annuity income for their lifetime, each person could set up a C & C annuity.

The only catch with annuities is that you are paying into the account with today’s dollars, which have more buying power than dollars will have 10 years from now. There are also fees involved with annuities that would be worth checking into before you sign on the dotted line.

It’s always a good idea to compare the income you would receive from other types of investments before going with a certain and continuous annuity.