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Life insurance is bought by someone in order to protect his or her family in case of death. This may be mainly bought by people who are the sole breadwinners of the family.
Capital protected annuity
For a slightly higher cost than a certain annuity, a guaranteed annuity can be bought. This pays an annuity (to the estate) for a minimum period even if the annuitant dies during that period. If the annuitant lives longer the payments continue.
Guaranteed annuity
For a slightly higher cost than a certain annuity, a guaranteed annuity can be bought. This pays an annuity (to the estate) for a minimum period even if the annuitant dies during that period. If the annuitant lives longer the payments continue.
Certain annuity
An annuity certain is a contract to pay an annuity for a specified period regardless of whether the annuitant survives. It does not depend on the age of the annuitant, as payment is guaranteed for the set period whatever happens.
Deferred annuity
It is possible to establish a purchased life annuity to start paying out at a future date, this being known as a deferred annuity.
The period between the date of the contract and the date the annuity is to commence (often called the vesting date
Temporary annuity
Some annuities can be bought where the income is paid only for a fixed term, eg. For 5 or 10 years. These are most often used in conjunction with Single Premium Bonds and Endowment/ Unit Linked Savings Plans.
Purchased life annuity
Also known as an immediate annuity, this type of contract provides, in return for a single premium, an annual payment starting immediately and continuing for the rest of the annuitant life.
