What happens to the lump sum on death?
The capital is given up at outset in return
for the guaranteed income and consequently there is no return on death. To this
end, it is possible to add an element of capital protection to the annuity so,
should the individual die early on in the policy then some capital may be
returned.
The capital protection covers a chosen
percentage of the lump sum, this amount reduces each month as the income is
paid out and eventually reduces to zero. Again, this adds to the cost of the
annuity as outlined below:
Example costs, based on a fixed income of
£12,000 per annum for a female aged 90:
|
Without Capital Protection:
|
£54,282
|
|
With 25% Capital Protection:
|
£55,366
|
|
With 50% Capital Protection:
|
£60,937
|
|
With 75% Capital Protection:
|
£82,894
|
Source:
The Annuity Bureau – April 2008
These rates are given for guidance only. In
practice, we can only provide a quote for you, once we have researched the
market on your behalf.