Annuities are used in conjunction with a defined contribution type of Pension. In other words a pension that you make contributions to.
Annuities are investment products used to convert your Pension fund into an income.
An Independent Financial Adviser can give you an indepth insight when it comes to this type of investment, but here is an overview of how they work....
A Lifetime Annuity
The idea with a Lifetime Annuity is that you will use the benefit amount of your Pension to purchase a Lifetime Annuity from an Insurance company.
Your Lifetime annuity will then pay out an Income for the remainder of your life. Each Lifetime Annuity can be different and will pay income monthly, quarterly, half-yearly or yearly.
The Amount of income your Lifetime Annuity pays can remain at the same level or you can choose for it to increase over time, protecting your Annuity against rises in the cost of living.
The amount of income paid out by your Lifetime Annuity will depend on the size of the Pension fund you have and also the rate which your Lifetime Annuity offers.
An Independent Financial Adviser will be able to discuss Pension schemes and a Lifetime Annuity with you and give you independent financial advice based on your personal needs.
Impaired Life Annuities
Impaired Life Annuities work in a very similar way to a Lifetime Annuity and would pay out an income for the remainder of your life.
The difference being that Impaired Life Annuities are designed to pay out a higher income to people suffering from named medical conditions which will reduce the person’s life expectancy.
Illnesses which may be covered by this type of investment often include Heart conditions, specified types of cancer, High Blood Pressure and diabetes. Please note that Impaired Life Annuities differ and it is essential to research what you would and would not be covered for. An Independent Financial Adviser can do this research on your behalf and make sure your needs are met
If you need some independent financial advice on this type of investment, speak to an Independent Financial Adviser. An Independent Financial Adviser can help you understand everything you need to know.
Many of the companies who offer Impaired Life Annuities will only accept business from people using an Independent Financial Adviser, but don't worry, if you need to find an Independent Financial Adviser you have come to the right place
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