• Funding school fees using a temporary annuity based upon the child’s life, either deferred or immediate. It is possible to receive the payments on an escalating scale to allow for future inflation in fees.

• Enhancing a retirement pension by converting part or all of the maximum tax-free cash into a life annuity, which carries tax advantages since part of the annuity is not subject to tax

• Taking early retirement, using a temporary annuity to cover a possible shortfall until State Pension Age.

• Funding the premiums of a life assurance policy using a life annuity or temporary annuity, often known as a ‘back to back’ annuity. The policyholder takes out a separate life policy and uses the income from his or her annuity to pay the premiums. The company will seek underwriting evidence as normal, to support the application for the life policy.

• Reducing the value of an estate, thus saving on inheritance tax, by purchasing an annuity.

• When a back to back annuity is used (see above), the life policy should be written in trust, so that if the policyholder dies, the lump sum from that policy is passed to the next generation, free of inheritance tax.