What is an Investment Annuity

zygurat789

And how does it difer from a normal annuity and a drawdown?

CannySaver_2

Hi

The income you get from an Investment Linked Annuity is dependent upon the performance of a with profit or unit linked fund. Whereas a traditional Lifetime Annuity pays a guaranteed income irrespective of fund performance.

When you buy an Investment Linked Annuity you anticipate a rate of return at the outset, this dictates the income you will initially recieve, the lower the anticipated growth rate the lower the income with the converse being true. At the annual review if the investment returns have been above your anticipated rate of return your income will rise next year, if they have been below your income could fall (some Investment Linked Annuities have a guaranteed minimum income which the income cannot fall below).

Income Drawdown leaves your fund invested as per your wishes and you simply drawdown the income you want each year, there are maximums you can take if you are in Capped Drawdown as opposed to Flexible Drawdown.

Hope this brief answer helps.

The Canny Saver

zygurat789

I thought that with a drawdown the fund value was not (necessarily) gone and at eventual death was an asset of the estate, whereas, with an annuity everthing was valueless (except to the insurance co) on death.
What is the case with an investment annuity?

jamesd

An investment annuity is effectively a way to get with profits investments back into fashion. Sad for the product providers that there were good reasons why they became unfashionable.

The specifics depend on the product being considered.