Final answer:
A life annuity with period certain guarantees payments for a set period and continues for the annuitant's lifetime, making it a reliable retirement income source despite traditional defined benefits' vulnerability to inflation.
Step-by-step explanation:
The type of annuity that guarantees payment for a specified minimum period and will keep paying for the entire lifetime of the annuitant is known as a life annuity with period certain. This kind of annuity is designed to provide retirees with a steady stream of income that they cannot outlive, combining the safety of a guaranteed period payment with the longevity protection of lifetime payments. It's particularly important for retirees to consider such options, as traditional pensions, or "defined benefits" plans, provide fixed annual amounts that do not increase with inflation, leading to a potential decrease in buying power over time. Therefore, a life annuity with period certain can be a valuable component of a retirement plan, providing financial security and peace of mind that basic financial needs will be met throughout one's retirement years.