Quintas Wealth Management - An annuity is a single premium insurance policy which is issued by a life assurance company where, in return for a lump sum payment now, the life company will guarantee to pay a specified level of income for the remainder of the life of the individual insured by the policy.  The rate of the annuity depends on the particular individual and will be influenced by age, sex, health etc.

It basically provides a guaranteed income for the rest of your life. Unlike a tax-free lump sum, you pay income tax on income from an annuity. There are a number of extra options you can take advantage of with an annuity. However, any options you choose will affect the cost of the annuity and so the level of income you receive.

Annuity Options:

• You can guarantee the annuity income so that it will be paid for a minimum period, even if you die.  This is called the ‘guaranteed period’ and can be up to 10 years.
• You can choose a set income or one that increases each year (for example, your payments may increase by either 3% or 5%, depending on Revenue limits).
• You can choose an income that can be paid to your husband, wife or dependants after your death.
• You can arrange for your annuity payments to be paid every month, every three months, every six months or every year.
• An annuity usually ceases on death, although certain types of plans can provide a continuing payment or benefit for next of kin.