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 a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.

Lachlan Mellings
12/08/2020
Reviews.co.uk Logo
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
Senator House
85 Queen Victoria Street
London
EC4V 4AB
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.
Finalist - Moneyfacts AwardsFinalist - Cover Excellence AwardsHighly Commended - Protection Review Awards
Proud member of AMII (Association of Medical Insurers & Intermediaries)Proud member of Money Advice ServiceProud member of UnbiasedProud member of BIBA (British Insurance Brokers' Association)

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.

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.