5 tips to ensure you get the best annuity rates

5 tips to ensure you get the best annuity rates

Shopping around for the best annuity rates is vital if you want to maximise your retirement income. Unfortunately, the vast majority of people stick with the offer from their current pension provider as they are unaware that there maybe be better offers available from other pension providers. In the UK we shop around for almost everything from mobiles to mortgages but because of a lack of understanding over annuities, most of us stick with our incumbent provider. This costs thousands in missed income as once you have bought an annuity you cannot change it. Below are five tips that should ensure you get the best offer available...

1. Speak with your current provider

Ask them why they offered you the rate you were given, and if they have any other alternatives to what is being proposed. Often providers and advisers fail to probe annuitants properly over their circumstances and financial position. Annuity products have many variations, with many different options available to suit individual circumstances.

2. Declare all medical conditions / lifestyle habits

One of the biggest problems for UK annuitants is that they fail to be asked or fail to declare any relevant medical conditions or lifestyle habits which may impact on their life expectancy. Even minor conditions, both past and present can mean you maybe elgibile for higher or enhanced rates. For severe conditions such as heart attacks, you could increase your reitrement income by up to 40%.

3. Seek independant advice

Once you have spoken to a few providers, gather all the information and then seek advice over which is the best way to proceed. This could mean hiring an independant financial adviser (IFA) or merely researching the topic yourself online. Consider all the options and pick the one which best suits your financial predicament.

4. Think about the future

Your financial position may change during retirement, so make sure you pick an annuity that will support you should your position change. In addition to this, the economic outlook could change, both positively and negatively. If inflation rises sharply, you could find yourself worse off if you opted for a level annuity for example. Consider also if the markets improve dramatically, you may wish you had taken an annuity with higher risk investment funds linked to it.

5. Shop around between providers

As mentioned this is absolutely vital and is the number one reason why some UK annuitants miss out on potential income. You may even find your current provider's offer is in the end the most suitable option, but you should always consult several other insurers first.

Following these five steps should help you avoid missing out on any potential retirement income.

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