What Is an Annuity?

An annuity can be a valuable option for investing your pension fund with an insurance company. With an annuity, you can receive a reliable and low-risk income stream for the remainder of your life, regardless of how long that may be. 

To determine your annuity payments, the insurance company considers various factors, including your age, lifestyle, health, and location. This allows them to provide a payment that's tailored to your individual circumstances.

Interestingly, the ability to provide an income for life is made possible by a practice called cross-subsidy, which means that those who pass away before receiving full repayment of their capital help subsidise those who live longer and withdraw more than their annuity purchase price.

Did you know?

You don't have to buy an annuity from your current pension provider and will probably get more by shopping around.

Up to 40% more!

If you are a smoker or suffer from ill health, you may be eligible for up to 40% more annuity income.

What Risks Are Involved With An Annuity?

Annuities are primarily invested in low-risk government bonds (GILTs) and other high-grade bonds. These types of investments are generally perceived to be lower risk when compared to stocks and shares. However, while they offer relatively lower risk, their yield can still be affected by market forces. It's important to note that varying market conditions can have an impact on the yields, and in turn, the income payable from immediate annuities.

Annuity Quick Facts

  • Basic death benefits can be very cost effective and reduce the income in a very small way.
  • Fixed-term annuities can come with other types of death benefits such as value protection.
  • Enhanced Annuity Rates can be achieved if your spouse has medical problems and spouse protection is selected.

Compare Annuity Providers

Use our quick quote portal to enter basic information and get a personalised quotation from all of the open market annuity providers.

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