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How things stand if you’ve just bought an annuity
If you’ve recently bought an annuity, you may want to cancel it. The good news is that some insurance companies have extended the cancellation periods. Here’s how things stand.
If you're about to retire, don't rush out and buy an annuity now. You need to think about the best approach for you now that the new rules give you more freedom.
And if you've recently bought an annuity, you may be furious that you've been locked into a low income when better options are now available.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Hargreaves Lansdown has put together a useful table which gives the current state of play for ten providers.
Swipe to scroll horizontally
Aviva
30 days from the date the application was signed
Now 30 days from when the policy has been set up instead of when the application was signed
Canada Life
30 days after policy document issued
No change
Hodge Lifetime
30 days from the date the application was signed
No change
Just Retirement
30 days from date the client received their right to cancel (issued with application form)
No change
Legal & General
30 days from the date the application was signed
No change
LV=
30 days from the date LV= receive the completed application
Extended to 60 days from the date LV= receive the completed application this is for customers currently within their existing 30 day cancellation period and for new customers who apply for an annuity in the next month
MGM Advantage
30 days after policy document issued
Extended to 60 days after policy document issued
Partnership
30 days after they receive a confirmation letter (posted to the client when Partnership processes the application)
Extended to 11 April 2014 (if current cancellation rights were beyond 11 April then the standard 30 days still applies.)
Prudential
30 days from when they receive their first Prudential quote
No change
Standard Life
30 days after policy document issued
No change
Source: Hargreaves Lansdown
If you're able to cancel your annuity purchase, it probably makes sense to do so. Then you can decide the best approach for you in an unhurried way.
The only exception to this is if you have a guaranteed annuity where you're able to benefit from a much higher pay out rate.
Some guaranteed annuities pay out as much as 10% a year or more, so some insurance companies are keen to wriggle out of the guarantee if they possibly can. If you cancel your purchase, that could give the insurer the perfect opportunity to do just that.
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Ed has been a private investor since the mid-90s and has worked as a financial journalist since 2000. He's been employed by several investment websites including Citywire, breakingviews and The Motley Fool, where he was UK editor.
Ed mainly invests in technology shares, pharmaceuticals and smaller companies. He's also a big fan of investment trusts.
Away from work, Ed is a keen theatre goer and loves all things Canadian.
