The great annuity gamble

Article Abstract:

Buying an annuity in the UK involves risk. The capital is used up and the insurer benefits from a shorter life expectancy for the person being paid the annuity. The insurer also hopes to make more from using the capital than is paid as an annuity. Annuity rates vary according to the prevailing rates of interest and from company to company. Annuities can take inflation into account, but the initial payments are not as high. There are also better rates for people with lower life expectancies called impaired life annuities.

Personal finance

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Equitable under fire

Article Abstract:

Equitable Life faces criticism over a managed annuity product offered from Oct 1993 to Mar 1994. The product was intended to allow investors to defer buying annuities when rates were low, and to allow them to allow heirs to inherit their pension funds. The product was not permitted by the UK tax authorities and was withdrawn. People who defer annuities tend to subsidize those who buy them young. The company will contact investors who purchased this product, to offset criticism.

Life Insurance, Direct Life Insurance Carriers, Product defects and recalls, Insurance industry, Life insurance industry, Equitable Life Assurance Society

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How to beat the annuity blues

Article Abstract:

UK annuity rates are falling following a rise in early 1996 due to lower yields for government securities. This affects annuity income for policy holders of personal pensions. Rates offered by insurers show wide variations which can be as much as 20%. Providers of personal pensions do not always allow policy holders to move elsewhere without severe penalties. Greater flexibility was introduced from 1988 but policy holders with contracts from before 1988 could be affected.

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