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What Annuity Type is the Best for Me?

As annuities become increasingly more popular in retirement portfolios, consumers are tasked with doing more research into the different kinds of annuities, the add-ons available, and eligibility factors for each. These factors help to determine what annuity is the most suitable for each consumer and their particular needs and interests.

There are several different annuity types, all of which present different benefits to the consumer. Determining what annuity presents the most benefits is crucial to each individual consumer as they plan their retirement years. The most popular annuities are as follows:

• Value-protected annuities: This type of annuity is also known as a capital-protected annuity which is a more explicit version of the well-known guaranteed annuity. With the value-protected pension annuity, if the consumer passes away before age 75, the built-up fund is returned to their estate minus any income that was paid out along with 55% tax. What type of consumer would potentially benefit most from a value-protected annuity? Those who are most interested in protecting their estate should they pass way rather quickly after taking out the annuity would benefit greatly from this kind of annuity.

• Impaired/Enhanced Life Annuities: This type of annuity offers a higher rate to those consumers who are expected to live shorter lives. Those who could potentially qualify for this type of annuity include those with rather severe health problems or those who are overweight or smoke heavily. The benefit to this annuity is the increased rate. A potential drawback is the need to meet with an independent financial adviser. This can often entail a rather lengthy and invasive application process, but can be beneficial for those who qualify for the enhanced life annuity. What consumer benefits most from this annuity? Those consumers who have a shortened life expectancy or are suffering from a qualifying disease or condition would benefit most from this annuity.

• Investment-linked annuities: There are a couple of different investment-linked annuity products available. These include with-profits annuities and unit-linked annuities. The consumer is able to benefit from equity growth using these annuities, as they are tied to shares and corporate bond prices.

The most crucial aspect of investing in any annuity is being sure to choose what annuity is right for the consumer. There are several different annuities available, all of which offer different benefits and potential drawbacks. The only true way for a consumer to find the perfect annuity is to perform the necessary research to choose the annuity with just the right specifics to meet their specific needs.

Which UK Companies offer an Enhanced Annuity?

Many, if not most, consumers look to annuities to help them offset their living costs as they phase out of their working years and enter in to retirement. However, there are many options available to consumers that they often neglect to look in to each annuity that is available to them. For many consumers, this means missing out on an enhanced annuity, offered by an enhanced annuity provider.

With an enhanced annuity, a medical or health condition can actually work in the favor of the consumer. It can even boost annuity by as much as 50%. Enhanced annuities, otherwise known as impaired annuities, work on the notion that a consumer who has a medical condition will have a shorter life expectancy than a consumer who is in a better health state. Enhanced annuity providers believe that they will have to pay out an income for a shorter period of time, given the shorter life expectancy, and therefore, they pay out a higher level of income to the consumer. This allows the consumer to have more money each month, based solely on the idea that they have a medical condition that may shorten their life expectancy.

Nearly 20% of all annuities sold by providers are enhanced, or impaired, annuities. However, several of those consumers who would qualify for an enhanced annuity with an enhanced annuity provider, simply do not apply for the benefit. There are several general conditions that are used as qualification for an enhanced annuity. These include, but are not limited to, high blood pressure, cancer, diabetes, kidney failure, smoking, obesity, high cholesterol, and asthma. Consumers can qualify for an enhanced annuity through an application process that focuses on health and lifestyle conditions. There is hardly ever a medical examination required.

Not every standard annuity provider offers an enhanced annuity. In fact, there are very specific enhanced annuity providers currently on the market. The enhanced annuity specialists currently available include Partnership, Just Retirement, and MGM Advantage. Other enhanced annuity providers include Canada Life, Legal & general, Prudential, LV=, Aviva, and Reliance Mutual.

Any consumer that is looking to invest with an enhanced annuity provider, or any annuity provider, should consult with an independent financial adviser. Investing in any retirement plan can often be confusing and challenging but with so many options available to consumers, purchasing the right annuity for retirement can often be a daunting task for many. Using an expert for advice and information can help to ensure the consumer that they are making the best decision for their individual situation.

The Facts about Annuities

The number of consumers looking to finance their retirement years with the help of an annuity continues to grow. Annuities provide a sense of stability and security for consumers as they age out of their working years and allow some sense of financial freedom for those who are looking to enjoy their retirement. However, consumers need to know all of the facts about annuities before they embark on an investment. These facts about annuities can be learned through an independent financial adviser or even through independent research by the consumer. Either way, it is important for consumers to get all the facts about annuities before choosing the right option for them for their retirement, similar to engaging in any other investment strategy.

There are several different types of annuities, all of which have different eligibility factors and qualifying guidelines. The facts about annuities varies between type of annuity which is why it is critical for the consumer to do as much research as possible before making any determination on how they would like to invest their money for the future and for their retirement.

Different Types of Annuities

There are several different types of annuities available for consumers, all of which have different factors and guidelines. There are enhanced annuities available for those consumers who have a documented illness that may shorten their life expectancy. This specific annuity requires documentation of the illness in order to qualify. There are also conventional annuities for those consumers who are mainly focused on having a guaranteed stream of income throughout their retirement. For those who want income for only a short period of time there are fixed term annuities available that will make payments for only a designated period of time. And for those who would like to try their shot at earning money during retirement, there are annuities that can be linked to designated investments in the financial markets. Regardless of the choice, consumers should be educated on the exact facts about annuities, and each type, before investing.

Annuity Rate Factors

Not only do consumers need to know the basic facts about annuities, but they also need to aware of how their annuity rate will be calculated. The amount that consumers can expect to receive from their annuity depends on several factors. The first of these factors is savings. Part of the annuity rate will depend on how much the consumer has managed to save in their pension pot. Secondly, where the consumer lives will impact their annuity rate. Providers can base annuity rates on the mortality rates associated with different parts of the UK. Health of the consumer will also be factored in to their annuity rate. If the consumer is in poor health not only may they qualify for an enhanced annuity but they may also receive a higher rate because the insurer assumes that they will not be making payments for as long as they would if the consumer were healthy. Lastly, the consumer’s annuity rate could be affected by the current rates offered by other annuity providers. This is basic competition in the market. If insurers need to compete for business, they will most likely keep their rates competitive to attract more business.

Consumers should know all of the facts about annuities before they decide to invest. This not only means becoming educated on what is available but also becoming educated on what factors may influence their annuity rate, and therefore, their income stream. Knowing all of the facts about annuities can only serve to help the consumer plan for their future and their plans once they retire.