Things to Know Before Going for With Profits Annuity

With profits annuity is a combined payment of an income for life and lifetime annuity with the potential of growth and providing some ongoing inflation protection.  This kind of investment though could be very risky due to fluctuation which depends on the investment performance.  One’s income is linked to a with profit fund and with a steady performance,  income growth also becomes steady.

Keep in mind that not all providers offer a with profit option and for companies that do, they usually will give their clients several schemes. The with profits annuity has its advantages and drawbacks. know what they are so you would know whether this is the best option for you or not.  Here are some of the advantages:

With a wise investment, you could have a steady income growth; profit is guaranteed and this is something that any investor wants. A with profits annuity will never go down a certain minimum level as the term gets longer. Another good thing about it is that you can have several options that can fit how much money you are able to invest.

While a possibility of a steady income could be considered an advantage, there are also possibilities of varying income. Your income could fall with a poor investment performance and that fluctuating income will be very hard to budget.

Another thing that you should not fail to know are the restriction and possible penalties of with profits annuity.

Your income could possible fall if the bonus rate is lower that what you have anticipated. When you have finally chosen the anticipated bonus rate, it cannot already be changed in most instances. With this, your income will always be based on rate achievements compared with the bonus rate selected.

Before you finally invest your money with a with profits annuity scheme, make sure that you perfectly understand the in and out.