What happens on death?

Annuities usually pay a guaranteed income for life. What happens when you die depends on the type of annuity purchased.

Generally, under a standard single life annuity income payments cease when you die. However, there is optional protection that you may include at outset to protect any beneficiaries. These are:-

Guaranteed Period

A Guaranteed Period means that your annuity will be payable for a minimum period, normally five years, in any event. For example, if you were to die after three years and had selected a five year Guaranteed Period, your annuity would continue to be paid for a further two years after your death to your estate.

Joint Life Annuity

If you selected a Joint Life Annuity and you predeceased your spouse or civil partner, there will be a selected proportion (100%, 66%, 50% or 33%) of the annuity paid to your spouse or civil partner for the rest of his or her life.

Value Protection Annuity

This type of annuity protects some of your purchase price should you die before age 75. The agreed sum is to your estate, but currently there is no inheritance tax liability.  However, there is a 55% tax charge applied on the amount paid out.