In one example, the provider said the margin between no guarantee and a 20-year guarantee is just a 4% reduction in annual income, with a £100,000 annuity securing an income of £6,532 vs £6,270, a reduction of £262 a year.
The 20-year guarantee will return income of at least £125,400, irrespective of what happens to the customer.
Nick Flynn, retirement income director at Canada Life said: “No longer do clients need to trade off a big drop in income to provide valuable guarantees.
“The reduction in income from choosing a longer guarantee period which effectively provides a ‘money-back’ guarantee, is now so narrow as to cost peanuts, so it’s completely bonkers not to consider some guarantees to provide additional certainty.”
He added: “Now one of the biggest barriers to annuities, ‘I won’t get my money back if I die early’, can really be challenged and guaranteed periods need to be explored."
How the costs compare - £100,000 purchase price
|
Guarantee period, (to cover early death) |
Annual Income, payable for life |
Minimum Guaranteed income |
Change in annual income to provide additional protection |
|
None |
£6,532 |
|
|
|
5 years |
£6,522 |
£32,610 |
- £10 |
|
10 years |
£6,489 |
£64,890 |
- £43 |
|
20 years |
£6,270 |
£125,400 |
- £262 |
|
30 years |
£5,879 |
£176,370 |
- £653 |
|
50% Value protection |
£6,505 |
£50,000 |
- £27 |
|
100% Value protection |
£6,388 |
£100,000 |
- £144 |
Source: Canada Life annuity rates as at 11/04/2023. Healthy life aged 65, average postcode
From Financial Planning Jobs. For more click on any job.
-
IFA Administrator - Bedford - £25k-£30k
Financial Planning Jobs Read more... -
Desk Based Adviser - Surrey/Hybrid - To £40k
Financial Planning Jobs Read more... -
Financial Planning Administrator - South East - £28k-£30k
Financial Planning Jobs Read more...
This is a selection of jobs from our new Financial Planning Jobs site - for more job vacancies click on any job or the link below.
Financial Planning Jobs https://jobs.financialplanningtoday.co.uk/