Life Contingent vs Period Certain: What's the Difference When Selling?

Expert Analysis

Why this distinction matters so much: A buyer purchasing period-certain payments knows exactly what they'll receive the payments are guaranteed by the annuity company for a set period regardless of your lifespan. Their risk is minimal. For life-contingent payments, the buyer faces 'mortality risk' if you pass away, payments stop and they lose their investment. They price this risk into the discount rate.

Real example: $2,000/month for 15 years. Period-certain: Buyer might offer 9% discount rate = ~$156,000. Life-contingent (for a 45-year-old): Buyer might offer 12% discount rate = ~$139,000. Difference: ~$17,000 more for period-certain.

Strategy implications: If your settlement has a mix of both types, always sell period-certain payments first you get better rates and preserve the life-contingent payments as lifetime income security. If you only have life-contingent payments, your age and health status will significantly affect offers. Younger, healthier sellers get better rates because buyers face less mortality risk.

Some buyers specialize in life-contingent purchases and may offer more competitive rates for these. Our comparison tool identifies which buyers are strongest for your specific payment type.