When people leave their full time employment and are about to retire, they will have changing financial needs throughout the different of their lives in retirement. One of the most important things to consider is the age 75 which is the time Government legislation requires an individual to purchase annuities. When it comes to purchasing annuities, there are different types of annuities available which people can consider. Out of the many types, one of the new types that has become really popular is the fixed term annuity which is also known as FTA.
Fixed term annuity has been designed in a way that it allows an individual to consider their options at the end of their plan term and it also provides security. There are two stages in which an individual will be able to make financial decisions with a FTA. Firstly, it gives you the chance to invest in a more flexible annuity when you are about to reach the age of 75. Secondly, once you have reached the age of 75, you are given the chance to reconsider your options and get a better idea about your financial requirements and personal circumstances.
Everyone is different, and every individual’s circumstances are most likely going to change during the retirement period. Fixed term annuities allows an individual to choose from a wide range of income options as well as benefit options now. Moreover, you alos have the option to decide what maturity amount you would like to have returned at the end of the specified term. At the end of the specified period, you will receive a maturity payout (guaranteed) that can be further invested in a drawdown plan or in an annuity.
A fixed term annuity can also be set up on joint life basis. this means that if you a partner, you partner will continue to receive periodic payments once you have died. There are two types of fixed term annuity that you can opt for. firstly, there is fixed term annuity for a definite number of years which is usually minimum of three years. Secondly, you can opt for an annuity scheme to age 75. no matter which option you choose, the below mentioned features applies to both the types:
Guaranteed income until the end of the specified period
Income level can be chosen at outset. This can range from nil to the maximum which is allowable under the existing legislation.
Choice of death benefits
Guaranteed maturity amount which will be received at the end of the specified period
– once your plan reaches maturity, you have the option to choose the best plans just in case your future circumstances have changed
– you may be able to benefit from a higer income in the future just in case your health conditions worsen
– advantages of annuities and advantages of drawdown are combined
– until you have chosen the death benefit options, maturity amount will not be paid if you die before the expiry of the plan term
– Income received will depend on rates at that particular time. it may be worse or better.