What types of annuity are there?

There are various types of annuities with different options that you can add, which allow you to customise your annuity to suit you. These are some of the most common ones.

Single life annuity – This annuity provides you with an income for your life. It doesn’t provide an income for your spouse, civil partner or dependant after you die.

Joint life annuity – This annuity is designed to pay an income to you during your life and to continue paying out to your surviving spouse, civil partner or dependent after you die at the same or a reduced rate.

Guaranteed period annuity option – This annuity provides a guarantee to continue paying your income for a fixed period from your retirement date, up to a maximum of ten years, even if you die during this period.

Level annuity option – This annuity pays out the same amount of income every year for the duration of your life, or that of your spouse, civil partner or dependent if that’s what you choose.

Escalating annuity option – The income you receive will normally increase each year, either by a fixed rate, or in line with the UK Retail Price Index (RPI), which means it will increase with inflation.

Enhanced annuity (also known as an impaired life annuity) – If you or your spouse, Civil partner or dependent has, or previously had, certain medical conditions, you may be able to buy an annuity that will give you a higher income based on your/their potentially reduced life expectancy.

Investment-linked or with-profits annuity – The level of income from an investment-linked or with-profits annuity depends on the performance of the investment funds chosen. This means that the level of income can go down as well as up.