What is Value Protection?

14th February 2012

When it comes to thinking about retiring, most people like to plan ahead and ensure that they have enough money for their retirement. In addition, people like to ensure that their families are looked after and if they have been the sole income provider, there are plans that can be put in place to ensure that their income is protected even in the event of an unexpected death. Taking out annuity protection on your annuity income plan is one of these.

How does Value Protection work?

Annuity protection is almost like taking out an insurance over your annuity and it helps to ensure that if you were to take an annuity out and then die immediately your beneficiaries would still be able to recoup some of that lump sum and it would not all be lost to the annuity company. Without  value protection you could invest your lifetime savings into an annuity, a guaranteed income for the rest of your life, and die the next day leaving your entire pension funds to your annuity provider.

Value Protection generally covers you until the age of 75. This means that if you die before the age of 75 the amount of capital invested into the annuity, less gross income payments made is paid to your beneficiaries, subject to tax of    55%.

What benefits could I receive from Value Protection?

Although it might cost a little extra, Value Protection can give you a number of benefits especially if you are concerned about how your family may financially support themselves after your death.  This   protection helps to give your family access to your annuity funds upon death, ensuring that they are not left out in the cold financially as the result of an unexpected death. Deaths can be a traumatising time for any family without the need to worry about money and other additional problems.

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