An annuity involves paying a large amount of money now to receive periodic smaller payments down the line. Some annuity contracts are meant to guaranteed income throughout retirement. Like...until death.
You hand over a big bag of cash now, but the insurance company will send you monthly checks starting 20 years from now. These will last until you die...even if that deer-antler serum you've been injecting into your gums works, and you live to be 130 years old.
A term certain annuity is different. This form of annuity doesn't have the same potential longevity. The payments only come for a finite, pre-set amount of time. A term. You might get the monthly checks for 10 years...but with a term certain annuity, at the end of that 10-year span, the checks end. Nothing more is coming. Even if you live to 130.
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Finance: What is Term To Maturity?12 Views
finance a la shmoop what is term to maturity alright people well it's kind
of a lifecycle of a bond like a bond is issued or sold it has an assay a 15 year [Bond timeline appears]
duration somebody's written that money for 15 years its term to maturity when
it first was issued was 15 years but if you bought that bond nine years into it
some you know maturation process when all the hairs growing in funny places [Hairs grow out of bond]
then at that point it would have six years current maturity well what goes on
between these years interest payments and then eventually at the very end the
issuer pays back the principal to the investor who bought the bond and [Money transfers from issuer to investor]
everyone goes away happy-ish well bonds carry gradations in short medium and
long term terms to maturity like short term generally is considered one to five [Different types of bond appear]
years mid term medium term and something like that is like five to a dozen years
and long term is like up to you know thirty or even a hundred years after
that dozen or so no hard lines here they're all dotted and yeah Disney [Man discussing bonds at DisneyLand]
actually sold a hundred year bonds at one point and they are of course the
happiest bonds on earth [Disney bonds appear]