When shopping around for an annuity, you'll likely come across technical terms. Use our jargon buster to find out what they mean.
- Guarantee period - you can guarantee your annuity so it pays out for a specific number of years. If you die before then, the income will be paid to your partner or another dependant.
- Impaired or enhanced annuity - these pay out a higher income if your health or lifestyle may shorten your lifespan, for example, if you have an existing health condition or you smoke or are overweight.
- Lifetime annuity - these will pay you an income for the rest of your life, unlike a short-term or fixed-term annuity (see below).
- Short-term or fixed-term annuity - you can use part of your pension pot to buy an annuity that provides a short-term income. The rest of your pot is left invested, and you can choose to buy a lifetime annuity when your short-term one expires. You might choose a short-term annuity if you don’t want to commit your pension fund to a life annuity as you believe rates might get better in the future.
Find out more about annuities, including the different types available, on the Money Advice Service website.