Guaranteed
Period - If the annuitant were to die soon after starting their
annuity (and they had not selected a Guarantee Period, their income
would stop and no further payments would be made.
A guarantee period will ensure that income will continue to be paid
until the end of the guarantee period, which is usually five or 10
years from their first payment.
- Choose between one and 10 years (maximum), typically most people consider five or 10 year guarantees
- The longer the guarantee, the lower the initial income will be
- The annuitant can nominate anyone to receive the income from the guarantee either directly to the annuity provider or through a will
- If they live past the guarantee period their income continues, but when they die nothing will be passed on, the income will just stop (if no other options have been chosen)
Dependents
Pension
This allows the
benefit from an annuity to transfer to a dependent such as a spouse
or civil partner, should they die before the dependent. Different
amounts of the annuitant's income can be covered in this way, for
example 50%, 100% or a particular percentage depending on their
financial needs and circumstances.
- When the annuitant dies, the annuity income switches to pay the dependent, which pays them an income in the same way, for the rest of their life
- Your client can provide the medical details of their dependent so they can be factored into an enhanced quote
- It is worth considering this option in conjunction with any other provisions that may already be in place such as other pensions, savings or life assurance policies
Value
Protection – As clients may be concerned
they will not see full value from their annuity if they pass away in
the early years following the initial purchase they may wish to
consider Value Protection. With Value Protection, some money will be
returned to your beneficiary(ies) should you die without having
received the full value of your pension fund (subject to a tax
recovery charge, currently at 55%).
When you take out your
annuity, you can choose to protect a percentage of your pension fund,
up to 100%*. The lump sum payable when you die is the percentage of
your pension fund that is
protected, less the total gross annuity payments already paid to you.
Like
all options with annuities you also have to way up any drawback,
Adding these additional benefits from the start will reduce your
annuity payments and it will depend on how many benefits you include.
Therefore it is vital to look at affordability and the long term
consequences of these benefits.
Tax treatment depends
on individual circumstances and may be subject to change in the
future.
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