Third Way Annuities

Third Way annuities (some are also known as short-terms annuities) are a relatively new product in the UK, although they have been popular in America for some time. Despite their name, they are not an annuity in the traditional sense, they are actually a form of Unsecured Pension with some built-in guarantees. A Third Way Annuity will usually offer a guaranteed annual income for a fixed period, which might be a set number of years or, in some cases, until you reach a particular age (e.g. 75).

Advantages of Third Way Annuities

• Third Way annuities provide much of the flexibility of an Unsecured Pension, while providing protection against investment risk
• The death benefits available are generally superior to those under a conventional annuity

Disadvantages of Third Way Annuities

• The level of protection offered varies from product to product and from provider to provider. Third Way annuities still involve a greater degree of risk than conventional annuities
• The complex nature of Unsecured Pensions will be a barrier for many people. It is strongly recommended that you fully understand them before you consider their suitability
• There is no guarantee that annuity rates will be better at the end of the short-term annuity

Read our Alternatives to Conventional Annuities Guide >