What is a Temporary Annuity?

Could you explain to me what a temporary annuity is? I’m looking into buying an annuity for retirement and I’ve come across the term in my research. However, I’m a bit confused because I thought annuities were for life?

Question asked by Mrs B Blumenthal
30/09/2019

What’s a Fixed-Term Annuity?

A temporary annuity is an annuity that only pays out for a fixed term. You’re correct in that most annuities pay out an income for life — these are known as lifetime annuities and are the most common type of annuity sold today.

However, you also have the option to buy a temporary annuity, where you only secure a pension for a shorter period. When this term has passed, or the person who purchased the annuity (known as the annuitant) dies, payment stops.

When your term annuity ends, you’ll need to choose another source of retirement income.

Temporary annuities tend to offer a higher annuity rate than lifetime annuities because they’re paid for less time. This means you won’t necessarily have to use your entire pension pot to buy a retirement income.

You may favour a fixed term annuity if:

  • You require a pension income today but aren’t ready to commit to a lifetime annuity
  • You want more time to consider your retirement options
  • You feel that lifetime annuity rates might rise in the future
  • You want to see if there are any future changes to the retirement market / legislation.

short-term annuity may not be best for you if:

  • You want a flexible retirement income or you want an income that lasts for the rest of your life
  • You feel lifetime annuity rates could be worse in the future
  • You want to invest your income for growth over a fixed period.

Compare Top 10 Annuity Rates

Takes approx. 60 seconds
  • £
Verified by Norton Symantec icon
 Or Call Us

Frequently Asked Questions

Contact Us

Head Office & Pensions and Investments
Senator House
85 Queen Victoria Street
London
EC4V 4AB
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Brighton
BN1 6AF
Drewberry London Office MapDrewberry Brighton Office Map

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.

Cookies

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies including for ad personalization.

If you would like to know more about cookies and how to manage them please view our privacy & cookie policy.

Deny
Approve