Fixed Term Annuities, which were launched in 2005, are quite self-explanatory. They function like a conventional or standard annuity and pay a guaranteed annual income in exchange for a lump sum. However, with a fixed-term annuity, the income is only paid for an agreed fixed term and not for the rest of your life as with a standard annuity.

At the end of the fixed term, your income will stop and you will receive a proportion of your lump sum back which can then be used to purchase another form of retirement income. You can also look for the best fixed term annuity Online.

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So why may you consider a fixed term as opposed to a standard lifetime annuity?

Fixed-term annuities allow you to keep control of your pension rather than locking into a rate for life, so in theory that you may be able to secure a higher income in 10 or 15 years when you come to purchase another form of retirement income. Your income could be increased due to changes in circumstances over the fixed period, for example, if:

Annuity rates increase

Your health deteriorates allowing you to qualify for an enhanced annuity which would offer a more favorable annuity rate as your life expectancy may be reduced.

The annuity rates will improve and you will be able to increase your retirement income at the end of your fixed term. The information contained in this article is for information purposes and should in no way be treated as advice.