Tag Archives: Investment Linked Annuities

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.

Use Independent Financial Advisors as Annuity Specialists

Annuities allow you to exchange your pension savings for a regular income throughout your life, or for a certain pre-agreed period of time. They are one of the most popular ways to provide financial security during retirement. There are various types of annuities out there – fixed conventional annuities, lifetime annuities, joint life annuities, variable annuities like escalating annuities, or investment linked annuities. Annuity specialists and independent financial advisors can help you understand the different types of annuities and make an informed choice.

There are different kinds of financial advisors, those who specialise only in a certain product, and independent financial advisors who specialise in an entire sector – for instance financial planning for retirement. Annuity specialists or advisors with expertise only in the annuity market are able to offer advice only on annuities, obviously. They can help you identify your needs and choose the best annuity product available in the market.

As opposed to annuity specialists with expertise only in annuities, independent financial advisors can offer help and guidance on an array of investment and insurance products like annuities, equity release products, lifetime mortgages, etc.

As such, independent financial advisors are generally equipped to offer advice about the entire spectrum of equity based financial planning. Annuities are one of the many solutions for financial planning during retirement, and may not necessarily suit everyone. Speaking to an independent advisor therefore helps you identify the best option from a range of investment products – not necessarily just annuities.

At the same time, independent financial advisors too can offer detailed advice only about annuities, just like annuity specialists can. There are different types of annuities, and choosing the right annuities involves understanding your own needs, understanding the different types of annuities, and making an informed choice to suit your circumstances. An independent financial advisor can help you make this decision by guiding you through all the steps of the process.

Choosing an annuity is one of the most significant and important decisions of your life. An annuity once purchased cannot be cancelled or reversed, and it has an impact on your financial security for the rest of your life. It is therefore important to give the decision making process the effort and time that is due. Annuity specialists and independent financial advisors can offer impartial and objective advice that is not biased towards any particular provider, but towards your own circumstances and needs.