Cookie Use

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacycookie policy.

What is a Temporary Annuity?

Could you explain to me what a temporary annuity is? I’m looking into buying an annuity for retirement and I’ve come across the term in my research. However, I’m a bit confused because I thought annuities were for life?

Question asked by Mrs B Blumenthal

What’s a Fixed-Term Annuity?

A temporary annuity is an annuity that only pays out for a fixed term. You’re correct in that most annuities pay out an income for life — these are known as lifetime annuities and are the most common type of annuity sold today.

However, you also have the option to buy a temporary annuity, where you only secure a pension for a shorter period. When this term has passed, or the person who purchased the annuity (known as the annuitant) dies, payment stops.

When your term annuity ends, you’ll need to choose another source of retirement income.

Temporary annuities tend to offer a higher annuity rate than lifetime annuities because they’re paid for less time. This means you won’t necessarily have to use your entire pension pot to buy a retirement income.

You may favour a fixed term annuity if:

  • You require a pension income today but aren’t ready to commit to a lifetime annuity
  • You want more time to consider your retirement options
  • You feel that lifetime annuity rates might rise in the future
  • You want to see if there are any future changes to the retirement market / legislation.

short-term annuity may not be best for you if:

  • You want a flexible retirement income or you want an income that lasts for the rest of your life
  • You feel lifetime annuity rates could be worse in the future
  • You want to invest your income for growth over a fixed period.

I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.

Brendan Kelly
26/09/2019
Compare Top 10 Annuity Rates
Takes approx. 60 seconds
  • £

Or call us on 0208 432 7333

Compare Financial Advice Logos
Contact Us
Head Office & Pensions and Investments
Millennium Bridge House
2 Lambeth Hill
London
EC4V 4GG
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Brighton
BN1 6AF
Drewberry London Office MapDrewberry Brighton Office Map
Our Core Principles
  • 1You Come FirstWe are a client focused business who always aim to put you first.
  • 2We are ExpertsTo provide you with the best advice, we need to know our stuff!
  • 3We are HumanWe are real people with feelings who are here to help you.
  • 4We are ProfessionalProviding a 5-star service requires a professional approach to everything we do.
  • 5We are here to EducateWe don't believe in sales, we are here to educate so you can make informed decisions.