Life Insurance Quotes

U.K. annuities rates present volatile but opportunistic market

09/09/11

According to the Financial Times, annuity incomes in the United Kingdom recently fell to record lows, and investors are seeing much lower yields from guaranteed annuities. Advisers say that given the volatility of the current financial climate, investors may want to either delay purchase or consider options beyond the popular guaranteed annuities, like fixed-term or investment-based annuities that have the potential for growth.

"It is worth considering delaying a purchase of an annuity if your circumstances allow it," said Gemma Goodman, head of The Annuity Bureau. "However, for funds to recover, in some instances this could take a number of years – and there is nothing to say that we won’t be affected by further downturns."
Guaranteed annuities provide security, guaranteeing a particular level of income for life, but recent and sharp declines in growth for annuities leave some investors concerned that given the current rates, locked-in annuities payouts simply won't be enough to sustain them through retirement.

According to the Insurance Information Institute, financial security and comfort is a big part of deciding on the type and amount of annuities investments a person purchases. While annuities can provide security and stability, they can sometimes be inflexible, and given the recent economic fluctuations, some investors fear incurring penalties in the event that they need to access cash in annuities that have not fulfilled certain withdrawal criteria.

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