Which Annuity is the best for me?

18th April 2012

Choosing a pension annuity can be one of the most challenging and important times in a person’s life – and it’s not a decision that should be taken lightly. In many situations, pension annuities can make or break a successful retirement, so taking the time to consider a range of options that are available to you can really make a difference to your retirement income.

What are the options available to me?

There are a number of different pension annuity options available to you depending on what you are looking for and your individual circumstances. Some options that you may consider include:

  • Enhanced annuitiesthese type of annuities are available to people who may be suffering from long term illnesses or very poor lifestyle habits. Generally this will lead to a reduced life expectancy as a result and therefore you may be eligible for a higher annuity income as a result
  • Joint annuitiesannuities are not just available for singles, they are also available for couples and help to give peace of mind to any partners who may have been previously dependant on their partner’s income. This type of annuity gives an income to both partners even in the event of an unexpected death
  • With-profits annuities – the with-profits annuity allows you to add an element of risk into your annuity purchase which can potentially benefit you. You choose an Anticipated Bonus Rate and if the annuity performs better than this then you will receive your share of the bonus, however if it doesn’t you will not receive any additional annuity income
  • Investment-linked annuitiesthis gives you more of an option over where your annuities are invested however, if you choose to invest in this way you could be susceptible to any potential problems with the stock market.

What do I need to consider?

When selecting an annuity plan you need to consider the most important element in your decision – You. Annuity plans are very much tailored to each individual so you need to take into consideration your own situation, your health status, perhaps even where you live, and look at what a range of different providers can offer you to suit your situation.

In many circumstances being of good health and leading good lifestyle habits can lead to a higher life expectancy and therefore it could lead to a lower annuity income, but this also works the other way. If you have long term illnesses or you currently suffer from poor lifestyle habits then you could find that you may be eligible for an enhanced annuity which could entitle you to an increased annuity income.

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