Tag Archives: Guaranteed Income

Is a Variable Annuity worth the hassle?

There are two main types of annuity – fixed annuity and Variable Annuity. Within these two types, there are different products, and different bells and whistles that can be added to different annuities to make them work best for you. The fact is that there are several different options when it comes to annuities – so it is extremely important to explore the open market and make a thoroughly researched decision. After all, an annuity, whether it is fixed or variable, cannot be changed or cancelled once purchased.

So let us look at the two main types of annuity. A fixed annuity is where the income you receive remains fixed and level throughout the term of the annuity. A fixed annuity is also known as a level annuity because the income remains level. The term of the annuity depends on the type of annuity it is. A lifelong fixed annuity will pay a fixed regular and guaranteed income for as long as you live.

A fixed term annuity will pay a fixed, regular, and guaranteed income for a fixed period of time. This is a pre-agreed period, and the annuity can continue to pay your partner or beneficiaries for the fixed period even if you die within the term of the annuity.

A variable annuity is one where the annuity income is not fixed and can vary through the term of the annuity. For instance, an investment linked annuity is a variable annuity, where the annuity is linked to an external investment such as in stocks or shares. The income you receive from this annuity depends on the performance of the investment – so it could be much higher than a conventional annuity if the investment performs well over time; but similarly, it could also be lower than a conventional annuity.

There is also the risk that you may end up losing the amount you invested in the annuity in the first place. This is a risk that is inherent in this type of investments. Other types of variable annuity include escalating annuity or inflation linked annuity.

An escalating annuity is where income increases by a fixed percentage each year. Although you receive a higher amount in the later stages of the annuity, the income during the outset is generally lower than a conventional annuity, all other things being equal. The risk with this type of annuity is that you really benefit from the increase only at a later stage, and have to compromise during the early stages of the annuity.

A variable annuity could work for you depending on your individual circumstances and your priorities. On the other hand, if you prefer to have a guaranteed fixed income, rather than worry about inflation indices and external investments, then a conventional level annuity may suit you best. It is important to note that there are risks associated with a variable annuity that do not exist with a simple level annuity. If you are not sure about which annuity may suit you, always consult a professional advisor who can give you impartial and expert advice on the matter.

Health Condition Qualifications for Enhanced Annuity Plan?

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.