One of the potential risks of purchasing a conventional annuity is that on your death, unless you have selected a guarantee period on your annuity, or a dependant's or spouse's pension, your payments will stop. Anyone reliant on that income may then find themselves in some difficulty.
Dependant's or 'joint' annuity To overcome this, most annuity providers offer the option of selecting a dependant's annuity, or spouse’s pension. This enables your income payments to switch to your financially-dependent partner should you die before them.
To overcome this, most annuity providers offer the option of selecting a spouse’s, civil partner’s or dependant's annuity. This enables your income payments to switch to your spouse, civil partner or someone financially dependent on you, such as a long term partner, should you die before them.
Choose the amount of income You can decide how much of your income they will receive – for instance 50% or 100% - and this will continue to be paid to them for the rest of their life.
Consider how it reduces your annuity income Selecting a dependant's annuity will reduce the amount of income you receive from the start, and selecting a higher percentage of your income as a dependant's annuity will reduce it further.
Weigh up your options You will need to weigh up the peace of mind benefit this option provides, with the reduced income you receive from the point you take out your annuity, and whether you have existing provisions such as life assurance which should be considered. Read about more options
For a full understanding of these options, we recommend you speak to your financial adviser. If you don't have a financial adviser, you can find one local to you at Unbiased.co.uk.
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