Are Flexible Annuities Worth Considering?
Are Flexible Annuities Worth Considering?
Quite so. 'Flexible annuities' is the general term for annuities that are invested in the stock market. Like other annuities, it provides a guaranteed income, but at the same time, the opportunity to make good profits and get a higher income based on markets. It's a great asset for people who otherwise invest in stocks or shares, and are looking for their annuity to act more like a high-return investment and less like a savings account with great interest.
On the face of it, you do not have to worry much about best annuity rates while opting for flexible annuities. They offer the following main advantages:
They can potentially increase your income by many times. When invested correctly, the income from flexible annuities had good scope for growth, without any limits.
It can give you flexible income. Thus you can control how much you want to bring in every period.
It guarantees you a minimum income. You are thus saved from making huge losses and can still have your peace of mind.
If you choose a unit-linked annuity, you have full control over where your pension is invested, thus letting you decide how much risk you want to take.
They provide you with options like Joint-Life, Income guarantee period as well as value protection like other annuities.
Thus flexible annuities give you far more advantages than traditional standard annuities with the best annuity rates, which do not let you alter income level, or choose different options once the income starts coming in. With flexible annuities you have much more control over what comes in from your pension.
There are two types of flexible annuities:
With-profits: In this case your pension is added to the provider's with-profits fund and invested in the market. Thus, you income will be directly related to the performance of the fund.
Unit-linked: In this case you can invest the pension in a mutual fund or market of your choice. This offers you more control over how well the fund does and the income you get, if you know what you are doing.
A website will help you find providers with the best annuity rates across both these types.
Flexible annuities are offered by all the leading insurance & annuity providers:
Canada Life, MGM Advantage, Prudential, Sun Life Financial of Canada
The only disadvantage of flexible annuities, or rather the few cautions that one must attend to are that with profits, there could also be losses. The annuities guarantee a minimum income, but do not guarantee a high income like some standard contracts with the best annuity rates. In the future, losses could reduce the amount of income, and with the effect of inflation, considerable reduce spending power. However, if markets do well, the increase in income will easily be able to tackle inflation, without the expensive charges of an escalating annuity. Add to that, people with level policies often do not know how long their income will be able to sustain the inflation, and to what extent. Flexible annuity however, gives you greater control over the kind of income you can draw, thus hedging the risk of inflation somewhat.
If you are looking for greater returns associated with investing in the market, you may consider flexible annuities, if escalating annuities do not appeal to you. Use a website that lets you invite quotes from all provider across UK for free, so that you can compare features and best annuity rates and make a well-informed choice.
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