Canada life now offers annuity protection

Why choose annuity protection?

One concern your clients may have with annuities is that should they die shortly after purchasing the policy, the amount of income paid out could be significantly less than the purchase price. This may cause your client or their dependants to have some concerns whether the policy is offering fair value.

Annuity protection helps address these concerns by allowing a lump sum to be paid in the event of your clients death. So whether they are able to draw an income over the long term or die shortly after purchasing the policy they will be getting the most from their hard earned pension fund.

How does it work?

With annuity protection, a lump sum may become payable should your client die before reaching age 75. The maximum lump sum payable is the initial purchase price¹, less the sum of the income paid, or to be paid under any guarantee period selected.

The amount of protection can range from 0.1% to 100% of the purchase price. This enables your client to protect all or part of the purchase price. The following example is to illustrate how annuity protection works only:

Purchase price £100,000: Single life income £10,000 p.a. with no guarantee period

The lump sum payable for 100% and 50% annuity protection should your client die after two years of income is paid, is as follows:

With 100% annuity protection: (£100,000 X 100%) less (2 x £10,000) = £80,000

With 50% annuity protection: (£100,000 X 50%) less (2 x £10,000) = £30,000

Payments are made net of 35% tax.

Joint life policies

Where a joint life income has been selected any lump sum will only be paid on the death of the last annuitant to die. The amount payable will take into account the total amount of income paid (or to be paid under any guarantee) to your client and the second annuitant.

The lump sum only becomes payable if your client dies before reaching age 75, although the age at which the second annuitant dies does not affect the eligibility for a lump sum payment.

When can annuity protection be selected?

The benefit must be selected when you purchase your Lifetime Annuity or Scheme Pension on a standard or enhanced basis² – it cannot be added later.

1For Scheme Pensions use 20 x the initial income if less than the purchase price

2The benefit is not available for Defined Benefit Scheme Pensions

For more information call our Sales Support team on 08457 22 62 32