Annuity Value Protection

Value Protection addresses head-on the concerns of those who believe an annuity could represent poor value if they were to die relatively young.  It effectively creates a ‘win-win’ situation, because even if you don’t make it to age 75, you will at least be assured that either you or your dependants will have benefitted significantly from the pension fund accrued.

How Value Protection Works

A lump sum may become payable from your annuity in the event that you die before reaching age 75.

The maximum lump sum payable under Value Protection is the initial annuity purchase price, less the sum of the income paid from the annuity.  Any Value Protection lump sum payable will be taxed at source at a rate of 35%.

Please note that the Value Protection option must be selected when you purchase your annuity – it cannot be added later.

A dependant’s annuity may also be paid.  In this case, any Value Protection lump sum will be paid on the 2nd death, and will take into account the total amount of income paid to both the annuitant and the dependant.

The Value Protection options

Full Value Protection

Full Value Protection gives you the opportunity of providing a lump sum for your beneficiaries, if you die before reaching age 75, equal to the initial annuity purchase price, less the total amount of income paid.  If you die after reaching age 75, no lump sum will be payable.

Partial Value Protection

Partial Value Protection operates in a similar manner to full Value Protection.

However, instead of protecting the full value of the initial annuity purchase price, you may select to protect a proportion of it. In this case, the lump sum payable will be the proportion of the initial annuity purchase price protected, less the total amount of income paid.

Other options available:

Lump sum/Income Guarantee

This option operates in a similar manner to Value Protection.  However, if you die before age 75, but still within the selected guarantee period, the remaining payments due under the guarantee will be payable as a lump sum. If you die after age 75, no lump sum will become payable, but income will continue until the end of the guarantee period.  Please note that if you choose this option, you cannot have Value Protection as well.

Dependant’s annuity

Choosing a dependant’s annuity ensures that an income will continue to be paid to your dependant (s), should you die before them.

If a dependant’s annuity has been selected with Value Protection, a lump sum will only become payable on the 2nd death, and will take into account the aggregate income paid to both you and your dependant. The lump sum only becomes payable if you die before reaching age 75, although the age at which the dependant dies does not affect the eligibility for a lump sum payment.

Who would benefit from Value Protection?

This annuity option may benefit you if:

  • You are concerned about losing out of your pension fund in the event of early death, particularly if you are in ill health
  • You are more interested in lump sum death benefits than an income
  • You want a guaranteed income stream and the reassurance of a lump sum death benefit if you die before age 75
  • 35% tax on lump sum death benefits may represent an income tax or inheritance tax saving for your family

Get a quote

http://www.annuitysupermarket.com

How to get the Best Annuity Rates

When you can buy an annuity

For most people, a pension annuity will be purchased between the ages 50 and 75. However the minimum retirement age will rise from 50 to 55 in 2010 and a few people in special circumstances may be able to avoid annuity purchase at age 75, but most people will purchase an Annuity aged between 50 and 75.

Age

The amount your pension fund (Annuity Rates) will buy depends on your age, gender and state of health as these three factors affect how long you are expected to live. The older you are when you buy an annuity, the higher the amount you are likely to be quoted because the annuity provider (an insurance company) is unlikely to have to pay you for as many years as someone who starts taking their annuity income at a younger age.

State of health

Similarly, if you are suffering from a medical condition or illness which is likely to reduce your life expectancy, your annuity provider will pay you more because you are likely to survive fewer years than someone in good health of the same age. The same applies if you are a smoker or obese.

Gender

Women tend to live longer than men, so a woman is paid less than a man of the same age and with the same size pension fund.

Spouses’ and partners’ pensions

If you want your spouse or partner to have an income after you die, you will want to buy a ‘joint life’ annuity. This will reduce the amount you receive (compared to if you bought a ‘single life’ annuity), but will guarantee your partner or spouse an income for life after your death. Enter their age in the ‘partner’s age’ box.

You can choose what percentage of your annuity income you want your partner to receive – typically, 100%, 66% or 50%. The higher the amount you choose for your partner, the lower your initial income will be.

Pension Drawdown

Pension Drawdown or Unsecured Pension

Expert Advice on Pension Drawdown

This involves you taking up to 25 per cent of your fund as tax free cash, and leaving the remainder of your pension fund invested. In the meantime, you can take income as and when you need it from the fund, subject to certain Inland Revenue limits, but you are not obliged to take income each year. If you want, you can choose to take no income at all for as long as you like until age 75 when you are obliged to either buy an annuity or transfer the fund to an Alternatively Secured Pension or ASP.

The minimum income you can take from an unsecured pension is zero and the maximum is roughly 120 per cent of what a single, level annuity would pay someone of your age. Unsecured pensions replaced “income drawdown” when the new rules for pension simplification came into force on 6 April 2006.

The advantages of taking an unsecured pension

Taking an unsecured pension has a number of advantages including:

  • income flexibility – each year the amount of income taken can be varied between the minimum and maximum limits. Income can also be taken monthly, quarterly, half yearly or annually.
  • control over your investments – if the unsecured pension is set up through a self invested personal pension or Sipp, there is a wide range of investment options available.
  • choice of death benefits – unlike annuities where the only death benefits available are from a joint life, guaranteed, or money back annuity, drawdown offers a choice of death benefits.

For more information visit annuitysupermarket.com

Pension Release for over 50’s

Are you aged 50 plus?

Pension Release gives you Tax-Free Cash

If you are aged 50 plus and considering pension release, the minimum age increases from 50 to 55 in 2010, so now is the time to contact us

What is pension release?

Pension Release or ‘unlocking’ is the term used for taking the benefits from your pension before you retire and getting up to the maximum tax free cash and/or income.

How much can I release?

The current rules say that you can release a cash lump sum of up to 25% of the value of your pension fund. This is tax free and is know as a ‘Pension Commencement Lump Sum’ (PCLS). In addition, the remaining fund can be used to provide you with an income that might be taxable – depending on your circumstances.

Take action now as the age changes to 55 from April 2010

Go here for a feee 28 page report http://www.annuitysupermarket.com/pension-release.html

Purchased Life Annuity Rates

What is a purchase life annuity?

It’s a contract that gives you an income for the rest of your life or for a select period of years, bought with a lump sum single payment.

Want to invest some money to get a guaranteed income?

Tips on purchase life annuity purchase

Why would I buy one?

This type of annuity is useful if you need a regular income and have some money to invest. You might want to:

  • top-up existing pension income;
  • pay for fees such as those for a retirement home;
  • get additional income until you receive your pension;
  • get a regular income until other investments mature;
  • provide income for a child or grandchild at college or university.

If you’ve a lump-sum to invest from a source such as:

  • a sale of a house or shares;
  • a tax-free lump sum from a pension fund;
  • your savings;
  • an inheritance;
  • an unexpected windfall;
  • a maturing life plan; or
  • a redundancy payment,

What about tax?

Part of the income you receive is tax-free. Your gross income payments are made up of two parts, a ‘capital’ part and an ‘interest’ part. The capital part is treated as a return of your capital and so is not taxed. We normally pay the interest part after deducting tax at the savings rate. You may need to pay more or less than this, depending on your tax rate.

Enhanced Annuity Rates – Check if you qualify

If you can answer yes to any of the following questions you may be able to obtain a higher income:

  • Do you regularly smoke cigarettes?
  • Do you take regular medication?
  • Have you ever been hospitalised for a medical conditions

If you have answered yes to any of the above questions, we will check if you qualify for special annuity rates.

Estimated up to 40% qualify for enhanced annuity rates

Examples of some of the conditions that may qualify

  • cancer
  • heart conditions
  • diabetes
  • asthma
  • obesity
  • high blood pressure
  • organ transplants
  • stroke
  • liver disease
  • alzheimer’s
  • chronic lung disease
  • kidney disease
  • multiple sclerosis
  • Parkinson’s Disease
  • or a disease of the central nervous system.

Open Market Option

The annuity market is very competitive and rates differ between annuity providers. You can substantially increase your pension income by purchasing your annuity from the company which pays the most income. This is called “exercising the Open Market Option.” It costs nothing to take advantage of this option and new rules introduced recently by the FSA mean that insurance companies must tell you about this option.