“A life annuity is a financial contract in the form of an insurance product according to which a seller (issuer) - typically a financial institution such as a life insurance company — makes a series of future payments to a buyer (annuitant) in exchange for the immediate payment of a lump sum (single-payment annuity) or a series of regular payments (regular-payment annuity), prior to the onset of the annuity. The payment stream from the issuer to the annuitant has an unknown duration based principally upon the date of death of the annuitant.”
A lifetime annuity is supposed to be a kind of longevity insurance where the uncertainty of an individual's lifespan is transferred from the individual to the insurer, which reduces its own uncertainty by pooling many clients, the difficulty is deciding when to take one out so it is good to see that some different annuity products are coming on to the market.
LV have launched a guaranteed annuity product which allows investors to lock-in investment growth. The Pension Income Plus Annuity allows clients to select an assumed investment return of between 0 and 4 per cent on their policy. Investors are protected from falls in investment returns by a minimum income guarantee. If investment yields improve the guaranteed minimum income level increases, locking-in a proportion of the investment returns received.
Head of annuities at LV Matt Trott says: “Investment-linked annuities are increasingly popular in the UK market, with advisers and clients alike looking for more flexible and cost effective alternative solutions to standard lifetime annuities.“ Experienced IFA’s like Enable can help you assess your options.
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