Purpose

• The purpose of a non-life contingent annuity is to provide you with an income for a set number of years. Income-paying periods range from five to 30 years. The amount of your annuity payment depends entirely on the amount you deposit with the insurance company, the interest rate the insurer pays on the payments and the number of years you elect to receive payments.
  
  

Significance

• The primary implication of a non-life contingent annuity is that it doesn't matter how long you live. Annuity payments continue for the number of years specified in the contract. If you die during the term of the annuity, your designated beneficiary receives the remainder of the annuity's payments.
  
  

Benefit

• The advantage of a non-life contingent annuity is that you and your beneficiaries are guaranteed to receive your investment back over time. With a life-only annuity, you may die before receiving all of your principal back. With this type of annuity, if you die prior to the annuity's maturity, the insurer keeps the remainder of your savings. With a non-life contingent annuity, your beneficiaries receive the rest of your payments until the annuity matures.
  
  

Drawback

• The disadvantage to a non-life contingent annuity is that it's possible to outlive your annuity payments. In other words, you may live past the annuity's maturity. If this happens, then you will be out of income from this source. This could leave you financially destitute if you don't have another source of income.