How do annuities work(i.e whole life annuities)?My auntie put £100,000 into an annuity which pays her £12,000 a year.That equates to 8 and a bit years,but suppose my auntie lives for another 30 years.Surely the annuity company will lose a lot of dosh over these years,or does the annuity company just hope that auntie drops down dead tomorrow?
What kind of investment is that,Tony?Do you lose everything if(God forbid)you die tomorrow?I think if my auntie dies tomorrow(God forbid)her investment dies with her.
That's what an annuity is. It's an option that suits some who want certainty. I'm not a great fan and wouldn't put everything in one but can see case for having some of portfolio as a annuity.
I know someone who took £500000 as a combination of lump sum and SIPP , and the SIPP lost £150000 in March due to Covid, and now wishes an annuity had been taken for some of it