07:02 08 December 2013
Is an Annuity right for everyone?
Annuities can be a good, low-risk way to ensure an income for retirement if - and it’s a big IF- you make an educated choice to fit your needs. It is a good idea, and your legal right, to shop around or use the “Open Market Option” when deciding on an annuity.
Common Reasons for Choosing an Annuity
Here are some common reasons associated with people choosing annuities over other options.
People who do not like risks tied to certain avenues of investments often choose an annuity to provide for retirement.
One kind of annuity increases by a fixed percentage each year to protect against inflation. Your income will be lower to start with, but will increase over time.
Some annuities let you set an income for your partner for the rest of their life, should you die. Other options include leaving them the lump sum of what is left from your annuity or a certain number of years of income, usually 5 to 10 years. These are called 'joint life', 'guaranteed periods' and 'value protection'.
Because certain medical conditions mean a client has a shorter life expectancy, providers will offer payment up to 40% more than common annuities.
Don’t just accept the offer of your pension provider without looking for a better offer. The difference could mean hundreds of pounds!
Quite often different providers will pay as much as 20% more (or 40% for those with medical conditions) per month, a difference in income that could be guaranteed for life. So take the time to do your own research on annuities as an option for retirement.
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