When after years of working you reach the age when you begin to think about retiring and what this might mean for your financial future and your future in general, you will no doubt begin to think about retirement schemes, investments and the possibility of taking out an annuity. Annuity schemes are run by insurance companies and each insurance company will have a variety of annuity options that you will have to choose from, should you opt for taking out an annuity.
Before you can understand annuity options, you first have to understand how an annuity works. When you retire, and you decide to take out an annuity, you exchange the whole of your pension for the guarantee of a regular income. You can decide how regularly you want to receive your income; monthly, quarterly, bi-annually or annually. Clearly there can be many variations to an annuity and one of the annuity options that you will need to decide between will be between a fixed annuity and an index related annuity.
The first annuity option, the fixed annuity, will give you a fixed income each month. This amount will not change over time. Alternatively you can choose an index related annuity which is tied to the stock market and will fluctuate accordingly. Another annuity option to think about is an enhanced annuity. Many people do not even think about applying for an enhanced annuity but it can give that little bit extra to get you through the month.
An enhanced annuity, as an annuity option, is for people who smoke, are overweight, who are on prescription medication or have been recently hospitalised. You can also of course apply for an enhanced annuity if you have a chronic illness. With this option, because your life expectancy will be less, your annuity will be higher.
Not everyone will be granted an enhanced annuity, but it is well worthy applying. You will also have to decide whether you want to take an annuity as a single person, or with your spouse or partner. And within this option there are a few more to explore. With an annuity there are many choices, not only what annuity provider you choose to go with but also the various annuity options that are also available. This is so that you can get the most out of your savings, and so that you will have financial stability well into your retirement.