11:47 25 February 2013
Trying to choose between the different annuities, or an income or flexible drawdown plan, can be intimidating. In this article, we’ll try to give you the highlights about different annuities so you can get on with your retirement planning.
1.Value-protected – If you die before the age of 75, all the money you have accumulated in your annuity is returned to your estate, with the exception of income that has already been paid out and a 55per cent tax.
2.Purchased life – This is a conventional annuity. You can choose fixed payments or increasing payments. This annuity would not be purchased or linked to a pensions, but purchased with a lump sum up-front
3.Impaired and enhanced life annuities –This option is excellent for those with minor to severe health issues. Companies pay you more income which may be very important to cover health-related expenses.
4.Investment-linked – These annuities are connected to shares and/or corporate bond prices and give you the possibility of growing more equity even though you’ve started to draw your pension.
5.With-profit –Returns on any investments (see the investment-linked description) are dispersed over time, and some of the return is withheld to compensate for years that may not get a large return on the investment.
6.Unit-linked – Also part of the investment-linked sector. You have the option to control your investment strategy and investments are not dispersed over time as they are when using a withprofit annuity.
Annuities are permanent so don’t be afraid to ask for help from a trusted Independent Financial Advisor (IFA) when doing your retirement planning. He or she can make sure you get the best quotes available to you without all the hassle.
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