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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.

Some Helpful Advice on Annuities

When you retire, or just before, you will be looking into ways to make your savings and your pension last for as long as possible. There are a number of investment options that you can make, and there are various ways to make your money last: one of these is an annuity. Annuities can seem complicated because there is so much information available and it can be difficult to sift through all of that to the details that you really need to know. So here is the information on annuities that you really need to know.

An annuity is a financial product that you can purchase when you retire. You have the option to take all of the money that you have saved in your pension and use it to buy an annuity. That annuity will then guarantee you a regular income for the rest of your life. You should not take the first annuities deal that you come across, even if it is offered by your current insurer. You absolutely must look around for the best possible annuities rate and the best deal. When you purchase annuities, the insurance company will use that money to buy gilts, the return from this investment is what makes up your regular income.

This is why it is so important to get the best annuity rate of return that you can; in addition you cannot get the money back once you have bought an annuity. There are a number of different kinds of annuities which you can choose from but it is in your best interest to look into an enhanced or impaired annuity. With annuities of this kind, you will receive a better annuity rate because your life expectancy will be less. People who are smokers, who are overweight, suffering from certain medical conditions or who are on prescription medication should apply for this type of annuity. This goes too for people who have been in hospital recently or who have a history of heart disease or cancer.

There are other kinds of annuities that you will have to look into, you can choose between a fixed annuity where you get a fixed amount every month that does not change and an index linked annuity which changes with the stock market. You can also get an annuity that increases with inflation. There are many options but the key thing to remember is to do your homework about annuities and shop around for the very best deal.

The Current State of the UK Annuities Market

The UK annuities market is in turmoil. This might seem like an exaggeration, but unfortunately it is not. For those who are nearing retirement the option of buying an annuity is simply not what it has been in the past. A few years ago you could buy an annuity when you retired and legitimately expect it to give you a fair degree of financial stability. Which is after all what they are designed to do – to make sure that you have a regular income from the moment you retire until your life ends. This is the brief of an annuity and unfortunately the UK annuity is just not taking care of retirees like they once did.

The current UK annuities market is being affected by a number of exterior forces. Because annuities are in essence a financial product they will be susceptible to changes in the market. With uncertainly prevailing in the Eurozone, the effects on UK annuities have been unsettling to say the least. On the one hand the uncertainly of the Euro remaining the single currency through Europe has meant an increase in gilts and bonds which have decreased UK annuities rates. On the other hand the Bank of England is also printing more notes, which has negatively affected the annuities rates.

Added to this is the new gender ruling, which prohibited annuity providers from offering different annuity rates, based on gender. This will mean that annuity rates for men will in all likelihood decrease, while UK annuities for women will remain the same. There is also the Solvency 2 ruling, which will force insurance companies to be more circumspect in their investments, and this will also negatively impact UK annuities rates.

There is some logic to the idea that there is a natural floor to how low UK annuities rates can go, and it would seem that we are pretty much there. The floor would mean that a person would simply get back the amount of money they invested in the first place, with no extra from the investment. This is where the UK annuities market is heading, but after that, once the Eurozone has settled and the financial markets begin to stabilise, there is a good chance that annuity rates will improve. It will take a few years for this to come into effect. But the outlook is not completely dark; there is some light at the end of the tunnel.

Online Comparison Websites Will Help You Compare the Annuity Open Market

As we are living for longer, planning properly for financial security during old age is becoming increasingly important. It really is imperative to consider all the alternatives carefully and choose products and investments that will help you optimise your savings and assets. A large proportion of people buy an annuity to turn their pension savings into a steady guaranteed income during retirement. There are many different types of annuities, and several annuity providers. So rather than take the first offer that is made to you by your pension provider, it is advisable to explore the Annuity Open Market and make an informed and well considered decision.

The best place to look for more information about different annuities and how they work is of course the internet, where you can access lots of information about all things annuity related. You can find information on websites of annuity companies, as well as from independent charities and organisations working in the area of retirement finance. Once you have gained some knowledge about the different options available in the annuity open market, you will want to compare different products in order to make the right choice.

There are many comparison websites out there that allow you to compare different utilities, services and products – and the same is true of annuities as well. Today, you can find a number of annuity comparison websites that allow you to compare products from the entire annuity open market. Most websites are free, however, some websites may charge a fee should you decide to buy an annuity through the website at the end of your search.

Some websites offer comprehensive financial advice, tools and other resources to help understand different products and make informed decisions. The newest addition to such websites is Hargreaves Lansdown, which has an entire section on retirement planning, financial products for the retirement sector, as well as an online pension calculator that lets you explore the pension and annuity open market, and calculate the maximum income you could generate. The pension calculator is among other tools like the annuity delay calculator.

Another familiar name has recently been added to the annuity open market and this is Tesco. If recent news reports are to be trusted, Tesco are set to enter the annuity market with its own annuity product in the near future. They are also planning to launch their very own online annuity comparison tool that can help customers compare different annuities and choose one to suit their needs.

Free Annuity Specialists Who Will Help Compare Annuity Rates

Annuity specialists and Independent Financial Advisors (IFA) can offer impartial and unbiased advice about the different annuities available on the open market. They can help you compare Annuity rates, compare different products, and understand the different types of annuities and choose a product that can best suit your individual circumstances and needs.

Professional independent financial advisors offer their services based on two types of payment – either an upfront fee, or a fee in the form of a commission. Upfront fee rates can range from £75 to £250 per hour depending on the location, type of advice etc. While an upfront fee is paid as a single upfront payment for the consultation and advice, a commission fee is paid only when you actually decide to buy an annuity through the advisor.

This means that you can receive free independent and impartial advice not just to compare annuity rates, but potentially until you need it, and until you have made a decision. The IFA is paid only when you buy a product through them. Irrespective of whether you agree to an upfront fee or a commission fee with your advisor, an independent financial advisor is qualified to offer completely unbiased and impartial advice and help you choose the most suitable product.

While an independent financial adviser can certainly help you compare annuity rates and find the best deal, there is yet another good reason to consult a financial adviser while choosing an annuity. Professional financial advisers often have access to exclusive deals and offers directly from the providers. These deals may not be available on the open market to customers, unless you buy the product through an adviser.

It is always a good idea to compare different advisers and choose one with the most experience and professional credibility in the field. Personal recommendations and references always help. But do not be afraid to shop around online, or locally too. Always make sure the independent financial adviser you choose is truly independent and not tied down to a particular company or companies.

If you are not sure if annuities are the right option for you and need independent advice about the best solutions for your circumstances, look for advisers with a broad field of expertise, rather than just an annuities expert. Unlike a specialist within a narrow area, a financial adviser with knowledge of the entire sector could help you explore more options and make the best decision.

Whether you need to compare annuity rates or simply need some friendly yet professional advice about your finances – an independent financial advisor could help you.