Tag Archives: Annuity Provider

Shake the Hand of the Annuity Provider Offering the Best Annuity Deals!

With annuity rates being depressingly low, those on the verge of investing in an annuity are facing a dilemma – wait for the rates to improve, or choose from one of the annuity deals available now and make the best of it. Keep waiting and hope that you get a better deal, or shake the hand of the annuity provider offering the best deal right now?

Annuity rates depend on a number of complex factors, and according to financial experts, the rates are not set to improve significantly, at least in the short term. However, there could be tiny fluctuations in the rates from time to time. But delaying investing in an annuity may mean that the lost income due to the delay may be far bigger than any gains from small fluctuations in rates.

Even though rates may be low at the moment, there are various types of annuities available on the market, and you can find a product that best suits your needs and offers an income that you are comfortable with. A financial advisor can guide you through all the types of annuities, as well as your own needs and make an informed choice.

Waiting for better annuity deals may prove to be a bad idea on three levels. One – it may mean that you lose out on regular income due to the delay, two – while you are waiting for annuity rates to improve, rates may go even lower, and three – any attractive deals and offers currently available could be withdrawn without any notice. Unnecessarily delaying investing in an annuity in the hopes of better annuity deals may therefore mean that you not only find a better deal but also make a loss in the process.

Popular financial products being withdrawn is not without precedence. The Halifax Retirement Home Plan is a good example of this. The Halifax Retirement Home Plan was a highly popular mortgage that was withdrawn without any notice in August 2011. This was the only flexible interest only equity release plan of its kind at the time and left a lot of people who were interested in it without any other option.

In fact, annuity rates, annuity deals and indeed annuity products can be withdrawn, updated or changed on a day to day basis. Waiting for rates to improve may mean that you not only have to commit at a lower rate in the future, but could also mean that you do not get the specific type of annuity that you wanted in the first place.

Annuity UK: All You Need to Know

There is so much information about annuity UK, that it can be difficult to find your way through all the facts to what is absolutely necessary. So here are the basics of annuity UK. An annuity is an exchange that you will have the choice to make when you reach retirement. About six months before you retire your current insurance company will send you information about their annuity rates and what your options will be. If you do decide to take out an annuity, you will then exchange the lump sum of your pension for an annuity. And that annuity will guarantee you an income for the rest of your life.

There are a few important things to remember here. You are under no obligation whatsoever to choose the annuity offered by your current insurer, and in fact you should absolutely look around at other annuity providers and find the best annuity UK rate that you can. You can also take up to 25% of your pension as a tax-free chunk which you can then do with what you like. Some people use it to pay off debts or the mortgage. It is also really important to remember that once you have bought an annuity, you cannot get that money back, which is why it is so important to do your research and find the best annuity UK rate and option for yourself.

When you buy an annuity, the annuity provider will use that money to buy gilts or bonds. These are like government IOU’s and are typically a low-risk investment. However, at the moment annuity UK rates are at an all-time low, and so the question of when to buy an annuity is also important. For most people waiting a few years for the market to stabilise is not an option because you will just be eating into your savings.

This is why it is vital to make the most out of whatever annuity UK you choose. It is also advisable to apply for an enhanced annuity. The majority of people miss out on this opportunity, but if you have health conditions, are a smoker, overweight, on prescription medication or any other physical illness or limitation you should apply for an enhanced annuity UK, because you will get a higher income each month. Take all of your options into consideration before making any decisions about which annuities to go for.

Can I Have a Tax Free Annuity?

There is no such as a tax free annuity. However, in a way, everyone can receive a kind of ‘tax free’ annuity, thanks to the tax free lump sum from your pension pot that you can use to purchase an annuity.

Currently you are able to get up to 25% of your pension pot as a tax free lump sum, which can then be used as an annuity fund to invest in an annuity scheme. An annuity scheme turns the lump sum into annual or monthly income during retirement. However, it is important to note that annuity income, which is the income you receive from an annuity provider, is treated as taxable income. This means that although your annuity fund can be tax free, it is not entirely a tax free Annuity, and the income you actually receive from the annuity provider is taxed by HMRC.

The amount is taxed at the appropriate tax band, depending on how much money you receive from the annuity. The annuity provider will deduct the tax before you receive the payment. The fact is that for most pension schemes today – the pension savings need to be converted into an income by investing the money into some investment product. This could be an annuity or an income drawdown plan.

An annuity is where the savings are converted into a regular income and an income drawdown plan is where you withdraw money from the savings as and when you need them. The advantage of an annuity is that although the income is taxed and there is no such thing as a tax free annuity, it is guaranteed for the agreed term of the annuity and you receive it at regular intervals. Depending on the type of annuity you can receive a taxable income for as long as you live, or until the end of a fixed term.

While annuity turns your savings into guaranteed income, income drawdown keeps your savings invested in external investments like stocks and shares, and you can withdraw the money as and when you need additional income. This is also taxable as per the appropriate tax band.

A tax free annuity does not exist in the sense that the income from an annuity is always taxed. However, everybody is entitled to a tax free lump sum from their pension savings which can be used to generate an income during retirement, either through an annuity or through an income drawdown plan.

Knowledge is Power When Buying an Annuity

Annuities are one of the most popular ways for people to turn their life savings into a regular income during retirement. In fact, the annuities market in the UK is the largest across the globe. There are different types of annuities, but on the whole an annuity works like this: the annuity provider, which is essentially an insurance company, agrees to pay you a regular income, either fixed or variable, for a fixed term, or for as long as you live. As an annuity once purchased cannot be cancelled or returned, buying an annuity is a decision that warrants extremely careful consideration.

The first step in making a correct choice when buying an Annuity is understanding your own needs and priorities. Knowing exactly what you need will help you make the right choice. For instance, is having a fixed, steady source of income throughout your life more important to you than risking a higher income with an investment annuity? If so, a conventional annuity may be more suitable for you. Or, would you prefer to have an annuity that grows with time, at the risk of settling for a smaller pay-out in the initial stages than a fixed life annuity? If so, an escalating annuity might be more suitable for you.

Buying an annuity correctly requires an understanding of the annuity market and how different annuity products work. You can find lots of information about annuities online through advisory websites, or even through different annuity providers. This includes finding out about different bells and whistles that may make an annuity work better for you. Buying an annuity that works best for you is all about looking in the right places, exploring the right resources and using the tools that are readily available to you.

For instance, an annuity calculator can help you determine the maximum income that you could generate through an annuity. Online annuity calculators are now widely available, and are easy to use, quick and convenient. Most calculators require basic information about your age, gender, location, and health and lifestyle habits to work out an accurate quote.

When buying an annuity, knowledge of all the aspects of the process is akin to power. The more you know, and the more knowledgeable you are, the more likely you are to find the right annuity.