What different types of annuity are there?
Standard annuities provide you with an income that’s paid for the rest of your life. The amount you can get will depend on the value of your pension pot and annuity rates available when you decide to buy your annuity.
Benefits and risks of choosing a standard annuity
| Benefits | Risks |
| Receive a guaranteed income for life | This is a lifelong decision. If your circumstances change and this annuity is no longer suitable, you won’t be able to change it. |
| Choose from a wide range of payment options | This policy has no cash in value at any time. You cannot currently sell it or transfer it to someone else. |
| The option to pay an income to your spouse or partner after your death | If you choose a level annuity, or an annuity that increases each year by less than inflation, your income will not keep up with rising prices. |
| The option to guarantee payments for a specified period after your death | Unless you choose a Joint Life annuity, a guarantee period or value protection, your annuity benefits will stop when you die. This may result in leaving inadequate provision for your dependants if you die before them. |
| The option to increase your payment each year, protecting your income against inflation. |
Pays a higher income if your lifestyle or your health could reduce your life expectancy. If you think this might apply to you, you should find out whether you’re eligible – you may receive a significantly higher income if you are.
Am I eligible for an enhanced annuity?
There are a number of lifestyle factors that mean you may qualify for an enhanced rate.
You’ll also be eligible for an enhanced annuity if you suffer from one, or more, specified medical conditions. These conditions may vary from provider to provider. If you suffer from one of them, the provider will want to know more details about your condition before deciding whether to offer you an enhanced rate.
| Lifestyle factors that could get you a higher retirement income:* | Medical conditions usually covered:** |
|---|---|
| Smoking | Cancer |
| Drinking alcohol (more than the maximum recommended limit) | Diabetes |
| Being overweight | Heart attack |
| Smoking | Multiple sclerosis |
| Parkinson’s | |
| Stroke |
*You should be honest about these factors when getting an annuity quote – they could get you a higher guaranteed income for life.
**Please be aware that this is not a complete list. You should always disclose any condition you may be suffering from to the provider, even if you think it may not be relevant. Different providers will have different acceptance criteria for enhanced annuities, and you should bear this in mind when shopping around.
| Benefits | Risks |
|---|---|
| Receive a guaranteed income for life that’s based on your health and personal circumstances | This is a lifelong decision. If your circumstances change and this annuity is no longer suitable, you won’t be able to change it |
| Choose from a wide range of payment options | This policy has no cash in value at any time. You can’t currently sell it or transfer it to someone else |
| The option to pay an income to your spouse or partner after your death | If you choose a level annuity, or an annuity that increases each year by less than inflation, your income will not keep up with rising prices |
| The option to guarantee payments for a specified period after your death | Unless you choose a Joint Life annuity, a guarantee period or value protection, your annuity benefits will stop when you die. This may result in leaving inadequate provision for your dependants if you die before them |
| The option to increase your payment each year, protecting your income against inflation. |
Other types of annuity
There are other types of annuity, such as:
Pay a guaranteed income for a set period. These can be used if you have a short term need for a guaranteed income, but want to retain some flexibility to choose another option at a later date.
Income paid is dependent on the performance of investment funds chosen when the annuity is set up. Because, of this income is not guaranteed and could go up or down (although some investment-linked annuities have the option to set a minimum amount of income).
Getting help
ReAssure is unable to provide financial advice or make a personal recommendation, but we can provide you with factual information about your policy and your options.
However, there are places you can go for help.
