What is a Lifetime Annuity?
A Lifetime Annuity is a financial product, sold mainly by life insurance companies, that provides you with a secure income for the rest of your life.
You buy this income by giving an insurance company some or all of your pension funds.
Lifetime Annuities come in a variety of types. Each of which contains a number of annuity options.
The options that you choose will affect the income that you will eventually receive.
The type of Lifetime Annuity that most retirees buy is a non-invested Lifetime Annuity. This is because it is relatively simple to understand and deemed to be less risky than other options.
The non-invested variety of Lifetime Annuity usually offers no option of future investment growth on your pension funds.
You effectively hand over your pension funds and in exchange, are paid a guaranteed level of income for the remainder of your life. You will usually be able to choose at outset whether you want the income to rise each year, but otherwise it will remain fixed throughout your life.
The rest of this webpage refers to non-invested Lifetime Annuities.
Types of invested Lifetime Annuities include With Profits Lifetime Annuities and Unit-Linked Lifetime Annuities. These both offer a chance of future income increases from investment fund growth.