If you are looking at this page, I imagine you are interested in securing yourself a guaranteed income for life because that is what an annuity does. Annuities are a very old and very misunderstood investment. The idea of the Annuity is similar to the basic idea of Insurance, that is that many people put their money into a pool and some benefit more than others. Thus, the Provider is able to calculate the age at which the average member of the pool die and base the rate on this, some will die earlier and lose, some will survive longer and gain. The old adage is true that if you take out an annuity your aim must be to “beat the Insurance Company”
People say that annuities are poor value for money, that is only true if you are one of the ones who die young but even then the purpose of the annuity is to provide you with a guaranteed income for life and it has done “what it says on the tin”
There is a time and place for an annuity. Annuity rates are based on the yield on long dated gilts – so you need to think about this before you take the plunge. Remember the annuity rate is based on your age when you enter the contract and does not increase as you age. There is also talk that annuities for males may be set to reduce by 10% becaue of a European ruling on equality plus aEuropean Directive which means that Insurance Companies will be forced to reduce annuity rates still further – so now is not an ideal time
However as you get into your mid or late eithies, an annuity may be the ideal way to boost income in a tax efficient fashion because only the interest part of each payment is taxed and if you buy an annuity when you are older the interest content is usually very low
There are a number of decisions which need to be taken when biying an annuity and Nicholls Stevens can help. We subscribe to a system which gives us up to date annuity rates.Clients often quote the rates found in the Sunday papers but I have to say that these are not up to the minute because they were researched before the paper went to print and by the time yu speak to us a week or more may have gone by.
We will also discuss with you whether you want the capital protected, how frequently you wantthe payments and whether you want the annuity continue to a spouse or partner if you die first. Buying an increasing or investment linked annuity can give you protection against inflation. Nicholls Stevens have been dealing in this market for many years and can give you the advice which suits your circumstances