What is a guaranteed payment period?
If you are considering taking out an annuity you may have some underlying concerns about what could potentially happen if you were to die unexpectedly within a short period of time after you have taken it out. For some people, annuities are not just an independent consideration, they are something that also needs to be considered by their relatives and immediate family members – accordingly they may choose to take out a guaranteed payment period.
A guaranteed payment period ensures that your annuity will be paid for a minimum period of time, regardless of whether you are still alive. It ensures that a substantial amount of your annuity is paid out and in the event of an unexpected death it covers any remaining family members who may be depending on you for a source of income.
What are some annuity options that can give me a guaranteed payment period?
There are a number of different annuity options on the market and some of these can give you a fixed annuity guaranteed period which covers a period of your choosing. In general this type of annuity option covers a period between five and ten years from when you first take out your annuity plan and covers you for any unexpected death within that time.
Depending on how long you take out your annuity guarantee period, you may be required to pay a certain percentage of your annuity income as a cost and this can be one downside of taking out a guarantee period on your annuity.
What are some benefits of a guaranteed payment period?
There are a number of benefits of a guaranteed payment period but perhaps the most important is that it can protect your family and beneficiaries in the event of an unexpected death. If you were to pass away unexpectedly during this period, your estate would pass onto your beneficiaries (after tax), rather than dying with you as it what happens with a regular annuity.
A guaranteed payment period can help to give you and your family a peace of mind that if anything were to happen, they would be looked after.