When you buy an annuity with your pension funds, you will have an option of adding a Guaranteed Payment Period.
By choosing a Guaranteed Payment Period you can ensure that your annuity will pay out an income for a fixed number of years, even if you die within the cover period.
You can usually choose to cover the first five or ten years of income.
Should you die during the Guaranteed Payment Period, the income will usually continue to be paid for the rest of the guarantee period or it may be paid to your estate as a taxable lump sum. This will vary depending on which annuity provider that you choose.
Additionally, if you set up your annuity on a joint life basis, then the surviving annuitant will receive a spouse’s or dependant’s pension at the end of the Guaranteed Payment Period as originally requested. This could be the same level of income or a lower amount depending on your original benefit level selection.