We are living for longer today than ever before. At the same time, the cost of living is ever rising. Changing social and economic factors mean that planning your finances during retirement has become more important than ever before. After all, retirement is known as the golden period, when one should be able to enjoy the fruits of life’s labour. It is therefore vital to plan carefully and optimise your financial assets to provide for you when you stop working. Things like annuity value prove to be immensely significant during retirement, as an annuity is one of the most important, and often the only source of income for pensioners.
An annuity provides a regular and steady income in exchange for a lump sum. People usually invest their pension savings into an annuity scheme, which then pays out an income either for as long as you live, or for a pre-agreed period of time. How much income an annuity can offer you, or Annuity Value, depends on the size of your annuity fund, which is the amount invested in the annuity, as well as various other factors.
The most important factors that determines annuity value is the type of annuity you choose to invest in and the current annuity rates. Other factors include age, gender, and location. Depending on your health and lifestyle, you could also be eligible for an enhanced annuity, which has a higher annuity value based on the shorter than average life expectancy of the applicant.
Often an annuity is the only source of income during retirement, and so choosing the right annuity with sufficient annuity value is extremely important. Once you buy an annuity it cannot be changed or cancelled – so it is important to make the correct decision the first time around. An annuity offers a chance to make the most of your life savings, but choosing an annuity that underperforms or does not suit your needs could mean losing your life savings to an ineffective investment.
It is imperative to shop around and use the open market option to find the most suitable annuity with a sufficient annuity value. You can consult an independent financial advisor with expertise in the retirement sector to understand the implications of investing in different types of annuities and choosing the best option. You can also use online tools like annuity calculators etc. to find out the best annuity value you could get in exchange for your annuity fund.
The open market option is the right of the consumer to shop around before choosing an annuity. An annuity cannot be changed or cancelled once it has been bought – so it is immensely important to choose correctly the first time around! After all, an annuity can have an impact on your financial security for the rest of your life, and is therefore one of the most significant financial investments in life.
Research shows that a huge proportion of people are not aware of the open market option and that many people still continue to commit to the first offer made to them by their existing pension provider. This is not to say that the offer made by your pension provider will not be competitive. But according to some research, shopping around could help you get up to 20% more income than your existing provider, depending on which annuity and provider you choose, and an impaired or enhanced annuity could mean getting up to 46% more! Using the Open Market Option and shopping around for the best annuity scheme can therefore help you to save thousands of pounds over the year and a vastly significant amount of money over time.
There are many different types of annuities and choosing the most suitable annuity can seem a bit daunting. This is probably why some people simply choose to stick with their existing pension provider for an annuity. But thanks to all the information, resources and tools available today, understanding the annuity market and making an informed choice is not difficult at all.
There are many comparison and advice websites out there which can offer objective information about different types of annuities. You can learn about fixed annuity options, variable annuity options, as well as different bells and whistles that you can choose to add to an annuity. You can also use online tools like the pension calculator, to work out the maximum income you can get for your pension savings lump sum. These free tools and resources can really help you make the best of the open market option. Most insurance companies and annuity providers also offer lots of information on their websites, as well as offering free instant quotes based on your individual case.
Shopping around and using the open market option has never been easier or more convenient than it is today, thanks to the wealth of resources and information available. If you need more help and guidance when choosing, you can also consult an independent financial advisor. In fact, for certain types of annuities, such as investment linked or escalating annuities, it is essential to take independent advice from an expert. An IFA can help you understand your own needs, different products and how they work, and ultimately make a considered decision.
Choosing an annuity is one of the most significant and important decisions of one’s life, as once chosen an annuity cannot be cancelled or reversed. An annuity converts your pension savings into a regular guaranteed income for a fixed period of time, or for as long as you live. There are many different types of annuities, and several annuity providers. It is therefore important to shop around and use the open market option before making a commitment. An enhanced annuity plan is a type of annuity scheme, which can pay a considerably higher income to those who qualify.
Recent research shows that a high proportion of pensioners could be eligible for an enhanced annuity plan, but are simply not aware of this. Therefore, by signing on to an annuity plan that pays significantly lower income than they could receive with an impaired or enhanced annuity plan, many people lose out on thousands of pounds per year.
An annuity is one of the most important, and often the sole source of income during retirement. It is therefore vital to make sure that you are getting the best deal and optimising your pension savings through an annuity. There are simple ways to check if you could qualify for an Enhanced Annuity Plan, but first let’s understand what an enhanced annuity is.
An impaired or enhanced annuity plan is available to those who have a shorter than average life expectancy. Based on this, insurance companies can afford to pay more, since the expected term of the annuity is shorter than in a conventional case. Insurers use the applicant’s health condition and lifestyle habits to determine whether they are eligible for an impaired annuity.
Some common health conditions that qualify for an enhanced annuity plan are heart disease, diabetes, high blood pressure and obesity among others. Lifestyle habits include regular smoking. If you suffer from these or other health conditions or are a smoker, you may be eligible to receive a much higher income from your annuity than a conventional annuity.
An independent financial advisor can help you find out if you would qualify for an enhanced annuity. An IFA can also guide you through the pros and cons of each annuity type and help you make the right choice. You could also use a simple online tool available on many websites, to determine whether you qualify. Many annuity companies offer an enhanced annuity plan questionnaire or form to determine whether an applicant could potentially qualify for an enhanced annuity. The form generally consists of simple health and lifestyle related questions.
Many consumers approaching their retirement years, if not most of them, choose to at least look in to the possibility of investing in an annuity to help fund their lifestyle once they have stopped working. For those who do decide upon purchasing an annuity, there are several different options available. Not only are there a variety of different types of annuities but there are also several enhancements and add-ons that can be attached to certain annuities. For many consumers, the sheer number of options available can make choosing an annuity incredibly challenging. This is why each consumer should consult with an independent financial adviser. Many consumers are missing out on several enhancements available to them, including enhanced life annuities, because they do not have all of the information necessary to help them make educated decisions on how they will fund their retirement years.
Enhanced annuities allow consumers to receive higher levels of income if they have certain life threatening medical conditions. These enhanced annuities operate under the premise that the insurer can pay out higher levels of income to these consumers because it is assumed that the medical condition(s) in question will shorten the life expectancy of the consumer. This allows the consumer to pay out for a much shorter period of time.
There are several advantages to investing in an enhanced life annuities, the first of which is the higher payout. Depending on the medical or health condition, consumers can receive up to 40% more than they would with other annuity purchases. The enhanced life annuity is not subject to fluctuations based on the markets or other investment conditions. Consumers do not have to partake in any regular or ongoing medication conditions. Therefore, consumers do not have to worry about their income decreasing if their health condition improves. Knowing exactly how much money will be received and knowing that it is guaranteed and will never decrease allows the consumer to budget for their future. This budgeting can be for every day or every month expenses or it can be to anticipate a large life purchase or to pay down debt.
There are very few disadvantages to purchasing an enhanced life annuity. The first of these is that the consumer must explain their applicable medical and health conditions. Therefore, there is far more personal disclosure necessary to purchase an enhance life annuity than is the case for a standard annuity. The only other disadvantages associated with an enhanced life annuity are those that are associated with all annuities. These include that annuity payments may not keep up with the increased cost of living. It is also impossible for a consumer to vary their income payments once they have already agreed upon the annuity logistics. For any consumer who has a very short life expectancy, it may be better for them to invest in another form of retirement investment such as enhanced equity release, income drawdown, phased drawdown, and phased retirement. This would better equip the consumer to maximize all of their death benefits while receiving the highest level of income possible for their unique situation.
No matter what the choice by the consumer, consulting with an independent financial adviser should be the first action taken when deciding how to invest in retirement. With so many options available, many consumers are ill-equipped to make the right decision for their personal situation. Secondly, they may not even know all of the options available to them. That accounts for why so many consumers are inadvertently bypassing the possibility of qualifying for an enhanced annuity.