An annuity is a financial product that provides a steady stream of income over a period of time, often used to provide income during retirement. Annuities are typically purchased with a lump sum of money, and they pay out a fixed amount of income on a regular basis, such as monthly or annually.
There are several types of annuities available in the UK, including:
- Immediate: These begin paying out income immediately after they are purchased.
- Deferred: These are designed to provide income at a later date, such as during retirement.
- Fixed: These pay out a fixed amount of income on a regular basis.
- Variable: These pay out an amount of income that is based on the investment performance of the underlying assets.
Annuities can be a useful tool for individuals who are looking for a guaranteed source of income during retirement. However, it’s important to carefully consider the terms and conditions of an annuity before purchasing one, as they may have fees and restrictions that could impact the overall value of the product.
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