23 Feb 2024

What happens to an annuity when you die?

When you die your annuity payments will usually stop. But that doesn’t always have to be the case. Depending on your product, you might be able to make sure a loved one is financially taken care of after you’ve gone. That can give you and them valuable peace of mind.

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Annuity calculator

It’s simple to use, and provides a helpful estimate of your potential guaranteed income in retirement. How much could you get?

Does an annuity stop when you die?

No – you might be able to arrange for a surviving loved one to benefit from it. The exact details will depend on your product and provider. And if you choose this kind of benefit, your provider will offer you a lower annuity income in return.

You’ll probably be able to choose between some or all of these three benefit types. They’re usually known as death benefits, which is a depressing way of describing something that’s actually quite positive:

Annuity guarantee period

This lets you set up an annuity guarantee period of between one and up to thirty years. The exact possible period can depend on how old you are when you’re setting up your annuity.

For example, we’ll only guarantee your annuity up until you’re 100. So if you’re setting one up with us when you’re 70, your maximum guarantee period will be 30 years.

If you die during that period, your provider will pay any remaining benefits to your chosen beneficiary. That money can go to anyone you choose.

Annuity value protection

This lets you protect a quarter, half, three quarters or all of the money you spend on your annuity. When you die, your provider will pay that amount of it back to anyone you choose, minus any money they’ve already paid to you.

Joint annuity payments continue

This lets you choose 50%, 67% or 100% of your income payments to continue being paid to a loved one after you die. You'll need to name who you want the payments to go to when you set up your annuity. You can learn more in our article 'What is a joint life annuity?'

What’s next?

We hope that’s helped you understand what happens to an annuity when you die. UK people can find out more by:

For more information on annuities, visit the Pension Wise website. It's a free government guidance service from MoneyHelper. If you're looking for retirement advice, we offer a Retirement Advice service

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