About Annuities

Flexible Annuities

A flexible annuity combines the advantages of an income for life with the advantages of a certain amount of flexibility and control over income payments, investment options and death benefits.

Flexible Annuities give you to greater control over your annuity

When a traditional (non-profit) annuity is set up, the options selected cannot be changed a later date even if the circumstances change. For instance if it is a joint life annuity and the partner dies first the annuity cannot be re-priced to reflect the higher rates for a single life annuity. Or if your circumstances changed and you wished to alter the level of income, you cannot change your income.

However a Flexible annuity gives you income flexibility, investment control and choice of death benefits. There are currently four types of flexible annuity:

The Flexible Investment Annuity from MGM Advantage

• A highly innovative product with simple investment options. This annuity will allow the client to take advantage of investment growth opportunities, whilst retaining flexibility on income levels. The Product also has a lifetime bonus structure, technically known as ‘mortality credit’.
• The product provides a minimum income guarantee.
• MGM is also a Mutual Society, and this contracts adds the benefit of a profit share bonus as well.

The i2Live Annuity from Sun Life Financial of Canada

• This is part of Sun Life Financial’s innovative i2Live range of retirement products which include a guaranteed income for life option. The product offer full income flexibility including ad hoc payments.
• The 12live proposition provides both an ‘accumulation vehicle’, to assist in the consolidation of funds, and a decumulation process with flexible annuity and drawdown.
• There is a wide range of investment funds to select from.

The Flexible Lifetime Annuity (FLA) from Prudential

• Flexibility over income, investments and death benefits up to age 85

The new Open Annuity from London & Colonial

• This is a unit linked annuity which provides a wide choice of investment funds, income flexibility. Death benefits can either be annuity "Value Protection" or a 10 year guarantee

The advantages of Flexible Annuities

• Provide more flexibility than standard annuities
• Wider range of investment options than with profit or unit linked annuities
• Choice of death benefits
• Combines the advantages of an income for life with some of the advantages of drawdown
• Flexibility after age 75

The disadvantages of Flexible Annuities

• Future annuity payments may be lower than expected if investment returns are lower than projected
• Increases in future life expectancy can be passed on to the policyholder through changes to survivor bonuses
• Investment returns and survivor bonuses may not be sufficiently high to compensate for mortality drag

Risk Warnings

• The income from a Flexible Annuity is not guaranteed and may fall as well as rise. This means that they are more risky than standard annuities
• past performance is no guide to the future