What is the difference between a Life (Fixed / Guaranteed) Annuity and a Living (Investment Linked) Annuity?
There are a number of different annuity options available in the market; however they can be broken down into 2 main types – Life Annuity and a Living Annuity. A Life Annuity is regarded as a traditional or guaranteed fixed interest annuity. Depending on the annuity rates at the date of exercising this option, a specified income level will be calculated according to your lumpsum investment, age, gender and life expectancy based on the prevailing annuity rates which are closely linked to interest rates. I.e. when interest rates are low, so are annuity rates and the inverse is also true. A Life Annuity is structured to provide a lifelong retirement income regardless of how long a person lives, the downside of this plan is that on death there is no capital amount or income which can be left to beneficiaries. There are a number of guaranteed life annuity options available: Guaranteed Life Annuity Options • Level – This option gives you the highest initial income, however this option will c