JUST SA’s weekly jargon buster aims to give simple, plain English explanations for typical words and phrases used in the financial industry, in particular, words relating to guaranteed life annuities and living annuities.
This week, we look at the letter: L
| Life Annuity | A life annuity is a financial product that you can buy with funds accumulated from a pension scheme or a retirement annuity. You can also use voluntary funds. You purchase a life annuity from an insurer, usually when you are approaching or in retirement. In exchange for the purchase sum, the provider guarantees to pay you an income for the rest of your life. The amount you receive will depend on your age, purchase sum, current annuity rates and product selection. |
| Living Annuity | A living annuity is a retirement income option where your retirement savings are invested and you choose your income amount and frequency. The income payments from this type of annuity may fluctuate in value as they are linked to the performance of the underlying investments. If investment returns are good, your annuity income payments may rise. If investment returns are poor, your annuity income payments may fall, so living annuities are not without risk. Income from a living annuity can incorporate a guaranteed life annuity (a blended annuity). |
Source: Just Retirement SA, [email protected].
The jargon buster is intended for information purposes only. It should not be regarded as advice as defined in the Financial Advisory and Intermediary Services Act 37 of 2002 or any form of advice in respect of the policy, retirement, tax, legal or other professional service whatsoever.
You are encouraged to seek advice from an authorised financial adviser or to independently decide what financial product is appropriate for you based upon your own judgment and understanding of your financial needs.
Just Retirement Life (South Africa) Limited is a licensed life company, regulated by the Prudential Authority of the South African Reserve Bank and the Financial Sector Conduct Authority as an authorised financial services provider (FSP number 46423).
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