Why shop around for annuity rates?

12th October 2011

Choosing an annuity is one of life’s big decisions, and making sure that you pick the right one can have a large impact on any potential pay outs that you may receive. Although may people find the idea of shopping around for annuity rates taxing, in the long term it can really change your lifestyle through the amount of money that you get from it.

Presently in the UK there are a whole host of different companies offering different packages, and to many people the idea of trying to sort through all the different options can become something of a nightmare. But it’s important to consider that once you choose an annuity it is generally a lifelong commitment, and if you are going to decide on how much money you will receive for the rest of your life, then it is worth shopping around for options.

What contributes to my annuity rate?

The amount of annuity income you receive can be determined by a number of factors. One of the most important factors is your health, and if it is a joint annuity, the health of your partner. As an annuity is a lifelong contract, the amount you receive takes into account how much time you are likely to receive the income for– if you are healthier then it is deemed that you may receive the income for a longer amount of time and therefore may actually receive a lower level of pension.

Does it really make a difference to my pay out?

Annuity rates can differ largely between companies and in some cases over 10% just depending on who you choose to have your annuity with. Although this may not seem like a huge amount, over a period of what can be over 20 years it can really add up, so shopping around when considering your annuity can really make a difference to your final pay out.

Am I able to change my annuity rate down the track?

In  most cases annuity companies will lock you in for life, which means that once you have made the decision of who to take our your annuity with you will have to keep it regardless of any new, better offers that may come onto the market.

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