“What is an annuity and should I buy one?”

 

Simply put, an annuity is a financial vehicle which provides you with an income for the rest of your life, in exchange for your pension fund.

 

Whether an annuity is right for you depends upon your circumstances and requirements and our step-by-step retirement options process will help you determine this and also find the correct annuity for you, should you decide that this is the option you require.

 

The advantage of annuity is that your income will be guaranteed for life.

 

If you live a long time, you will effectively receive a large share of your pension back over time. If you die in the short term, the annuity company may be able to pay out the residual fund less 35% tax depending upon the options selected at outset.

 

Therefore, you have effectively laying a bet on how long you will live.

 

You can build in spouse’s benefits, indexation as well as value protection to ensure your income rises over time, but this will reduce the level of income you receive initially.

 

You will also lose investment control, which is a significant issue to many people, especially those with larger funds.

 

Bear in mind that a combination of an annuity, drawdown and 3^rd way can be an effective way of building your income options profile.

 

 

A word of warning!

Do be careful which annuity you buy, as they vary considerably in the level of income they will give you. Our step-by-step retirement incomes option process is designed to help you to find the most appropriate annuity provider for you.

 

You should also take your state of health into consideration (see below).

 

My health is not that good does that affect the benefits I may receive?

Yes!

Although your present pension provider may not tell you this, as they may not provide an IMPAIRED LIFE ANNUITY.

 

If you suffer ill health, it is vitally important that you consider an Impaired Life Annuity option. These have been specifically designed for people whose life expectancy is not as high as those in good health.

 

Therefore, if you qualify for an Impaired Life Annuity your initial annuity income would be higher than if you had bought an ordinary annuity.

 

Again, our step-by-step retirement income options process will identify whether this option could be of benefit to you. If you would like to find out how our step-by-step retirement income options process could benefit you, please call us.

 

BEWARE! Buying an annuity is usually a once and for all decision!

 

Once you’ve bought your annuity, you’ve spent your money and can never get it back. You will  receive a set income for the rest of your life. So, buy carefully if you think this is the right route for you.

Our e-Book provides many pointers of the pitfalls you should be aware of and useful ideas to help you make the right choice. Call Us to find out more about our e-Book.

We’ve written these to provide a user friendly guide to this tricky area, to guide you through the choices in an easily understandable way. We really hope that this will make the right choice for you and avoid some costly mistakes.