Guaranteed Annuities

One of the major drawbacks with the purchase of annuities is that if you fail to make specific provisions in your contract, the balance of your fund is lost when you die.

For a relatively small cost it is recommended that you incorporate a guaranteed minimum period of up to 5 or 10 years into your contract. If you were to die shortly after retirement, a guaranteed annuity will continue pay for the remainder of the specified period to either your partner or your estate, for example - Mary retires at 60, takes her tax free element of her fund and buys a £30,000 annuity with the rest. She chooses level term with a ten year guarantee. She receives £2,160 pa which would provide 10 X £2,160 ie., £21,600. She unfortunately dies after only two and a half years having received £5,400. The balance of £16,200 is subsequently paid to her estate over the remaining 7 ½ years.

If you survive beyond the guaranteed period you continue to receive an income for the rest of your lifetime.