Annuities

Annuities are a special type of investment that will pay you an income for the rest of your life, however long you live. Buying an annuity involves using a lump-sum or, for example, a pension fund, to buy a guaranteed income for life, which is paid by an Insurance Company. Many options exist with annuities, such as choosing between rising and level income and making provision for your spouse.

Insurance Companies calculate the annuity rates they offer people by taking account of the fact that some people will live longer than others.

In essence, those people who die early subsidise the annuity rates for those who live longer, and because average life expectancy is rising and people are living longer, Insurance Companies have to adjust their rates accordingly to reflect this. So there are ‘winners’ and ‘losers’, but everybody benefits from the knowledge that they'll have an income for life - no matter how long that might be. The key is to shop around for the best annuity rate. Call into your local Bradford & Bingley branch, where one of Legal & Generals Financial Advisers can help you.