With Profits Annuities
With-Profits annuities are a type of investment linked annuity whereby your fund is invested into the insurance company’s with-profits investment fund. Your income is then directly linked with how this performs.
Advantages of a With Profits Annuity
- There is potential for a good, steady income growth over the lifetime of your annuity.
- Many providers offer a guaranteed lower level – that is to say a level below which your income will not fall.
- The way in which your income will fluctuate could make it difficult when it comes to budgeting.
- If the investment does not perform well, your income will fall.
Disadvantages of a With Profit Annuity
- The way in which your income will fluctuate could make it difficult when it comes to budgeting.
- If the investment does not perform well, your income will fall.
What to Look out for When Taking With Profits Annuities
Because of the nature of any sort of investment linked annuity, you have to be prepared for fluctuations in your income. It’s therefore always a good idea to take a with-profits annuity that does offer a guaranteed lower level income. This will protect you to some extent insofar as providing a guaranteed minimum income regardless of any potential poor investment performance.
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