Lifetime Annuity – Some Things To Know
A lifetime annuity is a financial product that promises a steady income to the holder of the policy. Lifetime annuities are considered to be the best kind of investment for retirement because so far there doesn't exist another financial vehicle which promises such benefits. In order to understand the importance of lifetime annuities, it is important to consider the consequences of not having an annuity.
If an individual does not have an annuity, he would depend on his pension funds to take care of his expenses. Making periodic withdrawals from the pension fund would pose two problems which include:
- withdrawing too much funds will exhaust your fund before you die and you will have to depend on others to take care of your needs and wants.
- withdrawing too little won't give you a chance to enjoy your life after retirement. However, if you die too soon, you will not be able to do all that you wanted to do in your retirement with your hard earned money.
Lifetime annuities which are also known as immediate annuities can be purchased from life insurance companies or annuity providers. Lifetime annuities are of various types and there are different options you can choose from depending on your particular circumstances and needs.
There are a number of factors which determine how your lifetime annuity will pay you.
- Once you have taken your tax free cash, the amount that is left in the pension fund can be used to buy lifetime annuity.
- Your lifestyle habits and your health conditions can result in you receiving a higher payout. If it is believed that your life expectancy is short, you may be able to purchase impaired life or enhanced annuity. These types offer a higher payout than standard annuities. In most cases, you will be able to maximise your retirement income by up to 30 or 40% when you opt for impaired and enhanced annuity.
- Your age also makes a huge difference. You will be able to receive a higher payout if you are too old.
- These days, annuity rates are adjusted on a frequent basis because many people tend to have a longer lifespan. For this reason, it is advisable to take out an annuity policy as soon as you have retired. The longer you wait, the more risk you may be taking in terms of falling rates of annuities.
- Women tend to have a longer life expectancy than men and for this reason, the starting income for men are higher than women even though both have the same pension fund size.
- Payouts are also affected by the benefits you choose. Since there are so many options available in the market, the rates offered for each type of annuity will vary. For example, if you choose joint life annuity, you will receive a lower payout. This is because the insurance company will also have to pay your partner regular income after your death for as long as your partner lives.
- Your postcode will also make a big difference because there are a number of areas where it is believed that people have a shorter lifespan. For these people, the annuity rates will be higher because the insurance company believes that they will have to pay the individual for a shorter period of time only.
If an individual does not have an annuity, he would depend on his pension funds to take care of his expenses. Making periodic withdrawals from the pension fund would pose two problems which include:
- withdrawing too much funds will exhaust your fund before you die and you will have to depend on others to take care of your needs and wants.
- withdrawing too little won't give you a chance to enjoy your life after retirement. However, if you die too soon, you will not be able to do all that you wanted to do in your retirement with your hard earned money.
Lifetime annuities which are also known as immediate annuities can be purchased from life insurance companies or annuity providers. Lifetime annuities are of various types and there are different options you can choose from depending on your particular circumstances and needs.
There are a number of factors which determine how your lifetime annuity will pay you.
- Once you have taken your tax free cash, the amount that is left in the pension fund can be used to buy lifetime annuity.
- Your lifestyle habits and your health conditions can result in you receiving a higher payout. If it is believed that your life expectancy is short, you may be able to purchase impaired life or enhanced annuity. These types offer a higher payout than standard annuities. In most cases, you will be able to maximise your retirement income by up to 30 or 40% when you opt for impaired and enhanced annuity.
- Your age also makes a huge difference. You will be able to receive a higher payout if you are too old.
- These days, annuity rates are adjusted on a frequent basis because many people tend to have a longer lifespan. For this reason, it is advisable to take out an annuity policy as soon as you have retired. The longer you wait, the more risk you may be taking in terms of falling rates of annuities.
- Women tend to have a longer life expectancy than men and for this reason, the starting income for men are higher than women even though both have the same pension fund size.
- Payouts are also affected by the benefits you choose. Since there are so many options available in the market, the rates offered for each type of annuity will vary. For example, if you choose joint life annuity, you will receive a lower payout. This is because the insurance company will also have to pay your partner regular income after your death for as long as your partner lives.
- Your postcode will also make a big difference because there are a number of areas where it is believed that people have a shorter lifespan. For these people, the annuity rates will be higher because the insurance company believes that they will have to pay the individual for a shorter period of time only.
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