Your annuity choices

You must understand the different types of annuity that are available to you, as this remains the most common choice. To recap, an annuity arises when you hand over your pension fund to an insurance company, and the company guarantees to pay you a certain level of income for the rest of your life. A non-conventional annuity (e.g. with profit annuity) does not offer this level of certainty, though can offer other flexibility, as you will see.

The annuity can arise in a number of forms:

Standard conventional annuity: e.g. you’re healthy and want no investment risk
Enhanced annuity: e.g. you smoke or have high blood pressure
Impaired life annuity: e.g. you are seriously ill, suffering from cancer
With profit annuity: e.g. you are comfortable with some risk to the level of your income, in the expectation of income growth
Unit linked annuity: e.g. you are comfortable with a higher level of risk than would be the case on with profits, in the hope of a growing income
Flexible or open annuity: e.g. again comfortable with investment risk, plus you’d like some flexibility on income and inheritability

We look at the most popular choices in the following sections, as you can see in the left hand menu.

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