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If you die soon after taking out an annuity, it won't have paid out
much. To guard against this, you can choose an annuity with a guarantee
period.
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These types of annuity commonly guarantee to pay out at least five or
ten years' worth of income, even if you die within this period. On your
death, the income may continue to be paid for the rest of the guarantee
period, or it may be paid as a lump sum to your estate (and inheritance
tax might be due on it) |
If anyone is financially dependent on you, don't regard a guarantee
period as a substitute for a joint-life annuity. If you
live to the end of the guarantee period, the survivors will get nothing.
Annuities if you have a partner
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A single-life annuity pays out only during your own lifetime. A
joint-life annuity pays out until the second person of a
couple dies.
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On the first death, some annuities carry on paying the same amount to
the survivor. With others, the amount is reduced for example, by a
third or a half. You choose at the outset how much income you want the
survivor to get. |
With some pension schemes, it is the law that you must opt for an
annuity that provides a pension for your widow or widower equal to half
the income you were getting. Your provider can tell you if this applies
to your plan or scheme.
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