Which of the following statements best describes a temporary annuity certain?

• A. It pays a fixed income for a specific period, regardless of survival.
• B. It pays lifetime income to the annuitant
• C. It pays variable payments based on investment performance
• D. It pays a single lump sum

Answer: (A)

A temporary annuity certain is a fixed-period annuity. It guarantees a level income for a specific number of years, regardless of how long the annuitant lives. After that set term ends, payments stop. This contrasts with a lifetime annuity, which pays for the annuitant’s life, and with a variable or investment-based annuity, where payments can change based on investment performance. It also isn’t a lump-sum payout. This type is useful when you want guaranteed income for a known horizon, such as until other retirement funds or needs are expected to be available.