Financial Adviser Hastings

The benefits and pitfalls of fixed term annuities


As the rates for lifetime annuities continue to fall – and are expected to drop even further when the regulations to introduce gender-neutral pricing come into force – individuals are considering fixed term annuities as a viable alternative.

These plans deliver a guaranteed capital sum for a short, fixed-term investment, which can then be used to buy another annuity, potentially a conventional one if gilt yields have improved and driven rates up.

While there are risks regarding the income received, fixed term annuities can be beneficial if individuals have or are likely to develop a medical condition that will enable them to apply for an enhanced annuity later on.

Furthermore, if it is the individual’s spouse that has a medical condition, they could benefit from using a fixed annuity if the spouse’s benefit is over 50 percent or if the spouse is materially younger.

 

Many such products now also contain break clauses, enabling individuals to switch if they develop a medical condition, change their marital status or lose their partner.

Connect with us
mcphersons Downloads
Financial Adviser Hastings
mcphersons News
8
May
Cryptocurrencies – what are they and are they here to stay?

Read our article on cryptocurrencies here.

21
Dec
Merry Christmas and Happy New Year

Please see our Christmas opening hours here.

7
Nov
Are we taming offshore finance?

We know trillions of dollars is stashed out of the …
[ read more ]