If you think that there is only one type of annuity, the conventional non-invested lifetime annuity, you are wrong. In fact there are many annuity types to choose from.


Today, of all the annuity types, a conventional non-invested lifetime annuity is still the most commonly bought annuity.

It is fairly simple to understand and provides a guaranteed income for life.

Depending on the status of your health, you will qualify for standard annuity rates, smoker annuity rates or enhanced annuity rates.

The highest annuity rates are paid to those people who have the poorest health. These annuities are often referred to as an Impaired Life Annuity or Enhanced Annuity.



Investment Linked Annuities


A With-Profit Annuity is similar to a conventional, non-invested lifetime annuity in that it provides an income for the remainder of your life in return for your pension fund.

The main difference between this type of an annuity and a conventional, non-invested lifetime annuity is that the initial pension level and future income levels are dependant on the performance of the underlying with profits fund that your pension fund is invested in.

A Unit Linked Annuity is very similar to a With-Profit Lifetime Annuity but instead of using a with-profit investment fund you can use a wider range of unit-linked investment funds.

The initial pension and future income levels are also dependant on the performance of the underlying unit-linked investment funds.

It is important you take advice as to their suitability because there is a risk associated with these types of annuities.

Other types of annuities


Third way/hybrid pensions essentially fit in between a Lifetime Annuity and a Capped Drawdown plan as they offer the chance to still participate in stock-market growth but with guarantees attached to either income, capital or both.

Only a few providers offer these types of plans and each one is different.

What will be the best annuity type for you? Talk to an adviser to find out.