Lifetime annuity – as suggested, a lifetime guaranteed income, possibly leaving a beneficiary with a lump sum or income at the time of your death.

Fixed-term annuity – a guaranteed income (1-40 years), once the annuity term has expired you would receive a lump sum, known as maturity amount (investment amount plus investment growth minus income received), which could be re-invested. If you pass away during the term of your annuity, your nominated beneficiary will receive a new calculated matured amount.

Purchased life annuity – this can be purchased before retirement and without your pension pot (a non-taxable sum). You would receive an income which is split into 2 parts, capital return which is not taxable and an interest return which is taxable. If you fail to opt for “no form of protection” – NO capital will be returned at the time or after your death.

A pension annuity is purchased at the end of your retirement with the lump sum you receive at the end of your service, otherwise known as your pension pot.

The annuity would provide you with an additional income, the amount of income you would receive would be dependent on the type of annuity purchased.