The importance of guaranteed income
'Happiness has many roots, but none more important than security'
A guaranteed income for life (GIfL), provided by an annuity, isn’t the right answer for everyone, but there are strong reasons to consider this as the bedrock of your clients’ retirement portfolio.
Strong Asset Class
When compared to a Guaranteed Income for Life (GIfL), other asset classes, even those with guarantees, will have difficulty generating the equivalent level of income, for life, because of the presence of investment risk.
Expenses like gas and electricity must be paid, so it makes sense for these expenses to be met by a guaranteed income for life. This could include the State Pension, or any Defined Benefit (DB) scheme, but for many people a GIfL will be part of the solution.
Capacity for Loss
Some clients simply can’t afford to take the risk of their investments falling in value significantly. A GIfL protects clients against market falls and provides reassurance and peace of mind.
There is now much more flexibility and choice to arrange a GIfL that meets the personal requirements of your clients at death. Guarantee periods of up to 30 years are now available, or you could have a lump sum returned using value protection.
A GIfL can provide excellent value. As well as the ability to ensure the capital invested is returned to the annuitant as income or to the beneficiaries through death benefits, value can also be thought of as the peace of mind of knowing that the income is guaranteed never to run out, and is unaffected by stock market volatility.
Eventually, it becomes almost impossible, without taking significant risks, to match the returns a GIfL can provide, so it’s important to review your drawdown clients regularly. It could be time for a change.