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
Compare Top 10 Annuity Rates
 
Takes approx. 60 seconds
Pension Fund
Date of Birth
Loading your options...
Thank you for using our Quote Tool
If you need some help, just call us!
T: 02084327334
Our in-house Experts are here to provide FREE impartial advice!
Our Experts can answer all your questions
Our Experts can send you more appropriate options based on your personal circumstances

Very important if you are either Self-Employed or a Company Director.

Our online quote tool is good but our Experts are better

Oue Experts have access to far more insurers and can often find a better deal offline.

Saves you time, let our Experts do what they are best at
Smoker

Answered by Michael Englefield

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.
Annuity
 
Pension
 
Retirement
 
Temporary Annuity
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 Annuity Rates
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Pensions Advice Questions

 
I know I had a pension with my first employer, but I don’t know who it was with or where any of...
 
I’m looking to set up a new pension for myself and wanted to know which private pension fund is...
 
I’m approaching retirement and I’m confused about my options. I’ve seen that one possibility...
 
I’m nearing retirement and have a few different pensions squirreled away. I’ve read that...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Robert Eldridge
07/06/2018

Rauri was easy to talk to. Explained everything really well. Took prompt action when requested and was in touch when he said he would be without being pushy.

Attila Mako
07/06/2018

Excellent service. Oliver was very helpful and patient with me. He gave me knowledgeable advise describing the product details clearly. His communication was prompt and precise! Great customer service!

Ian Brett
26/05/2018

Josh made a complicated process easy and I was kept informed throughout. I will be recommending Drewberry to every one who asks and even those who don't.

We are rated 4.9/5 based on 1512 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
1638 Reviews
D Gianfreda
Overall Rating
Friendly, efficient and professional service
T Bullock
Overall Rating
Friendly and professional
l kelham
Overall Rating
Excellent service, clear communication and advice
B Weller
Overall Rating
Very thorough service
E Portingale
Overall Rating
I had a short time to ensure I was covered appropriately due to change of circumstances and house move. I required a number of insurance policies for my new situation. I contacted Drewberry Insurance and found that they understood all of my needs and the best way to filter and sift appropriate insurers. They clearly understood the process...made everything very easy online and via telephone and always did as they said they would by actioning everything as and when requested. This took the time and confusion away from becoming insured. Their interaction and communication and explanation of all processes ensured I understood each stage of the process. Will recommend their services to anyone seeking insurance.