EXPLAINED

Annuities

  • 30 December 2019
  • 1 minute

Annuities are insurance products that allow you to buy a guaranteed regular income for the rest of your life. They are most commonly thought of in terms of retirement income but can be purchased for many other reasons.

How much income you get for your money depends on several factors including your current age, health and lifestyle; where you live; how big your lump sum is; the type of annuity you plan buying; and annuity rates at the time you buy.

If you have a medical condition, are overweight or smoke, you might be able to get a higher income by opting for an ‘enhanced’ or ‘impaired life’ annuity. Basically: if your lifespan is likely to be shortened on medical or lifestyle grounds, your money doesn’t have to stretch so far. But not all providers offer these.

Annuities come with many options. They can cover just one person, or they can provide a reduced income for a spouse when the purchaser dies. They can remain at a constant level or increase in line with inflation or by a fixed amount.

A word of warning: once you buy an annuity you can’t change your mind, so it’s important to get help and advice before committing yourself.

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