LV= has published a “Fact and Fiction” report for advisers, highlighting various personal circumstances and market changes that make fixed-term annuities a good choice for clients.
For example, a modest increase in gilt yields could make a fixed-term annuity a worthwhile strategy for many more retirees.
In fact, the report shows that if gilt yields returned close to the average yield seen between 1994 and 2012, a fixed-term annuity would be appropriate for most clients.
In addition, if a client has a spouse that is in very poor health, they could also benefit from not locking into a lifetime annuity rate at outset where the spouse’s benefit is over 50%, or if the spouse is materially younger than the main applicant.
According to LV= a fixed-term annuity should also be considered if a client has or is likely to develop a medical condition that could mean they qualify for an enhanced rate of 20% or more, further down the line.