How do I shop around for the best annuity

How do I shop around for the best annuity

Purchasing an income for your retirement – an annuity – is almost certain to be one of the most significant purchases of your lifetime. Huge sums of money are involved, the end product has a direct effect on your wellbeing until the end of your life, and in many cases the purchase cannot be reversed.

As such it's very important that you take the time to do your research and shop around in order to get the best annuity deal you can. Here's how to do it.

Decide the type of annuity you want

If you don't know the exact type of annuity you're after, finding and comparing will be made very difficult. As such, you need to think about details such as who the annuity is for (you or both you and your partner), if you'd like it to be temporary, or whether you'd like the income to be fixed or variable.

For more information on the various types of annuity, click here

If you're not sure which type of annuity is right for you, then visit a financial advisor. The fee you pay will be well worth the benefit you'll gain, against potentially losing out on a better annuity.

Where can I find and compare annuities?

Gathering details on the many annuities available to you is key, and there are a number of ways you can do this.

  • Use the Money Advice Service's comparison tool - If you want to get a good initial idea of what's on offer, use the Money Advice Service's comparison tool. This unbiased, free and secure resource allows you to search ten of the biggest annuity providers for a variety of different annuity types, and gives tips on how to get good deals. The only information you need to provide is your date of birth (month and year), your postcode, the type of annuity you're searching for, answers to some basic lifestyle questions and the size of your pension pot.
  • Comparison websites - There are a number of comparison websites on the internet that allow you to browse a wide variety of annuity providers and their various financial products. Using these, you can make a table detailing what each annuity option would give you, which you can then study in order to make a safe, informed decision.
  • Individual providers - There are also a number of annuity providers out there that aren't listed on comparison websites or the Money Advice Service tool. These can be found through internet searches and by asking friends and family, the information of which can then be placed into a table and compared.
  • Use a broker - For a fee, you can also employ the services of an insurance broker, who will do the research leg work for you, and then leave you to make a decision on your own.

Get financial advice

Even if you've done your research, compared what's on offer and found an annuity that works for you, it pays to gain independent financial advice. The advisor of your choice should always be regulated by the Financial Conduct Authority (FCA), and you should shop around for an advisor, taking into account their fees and overall experience.

Finding an annuity that suits your needs and future plans takes time, but makes sense. If you don't do your homework, you could find yourself in a poor financial position in the future, so explore all avenues before spending your hard-saved pension pot.

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