Annuity Payment Frequency

Most Insurance companies will allow you to choose how often your income is paid. You can choose for your income to be paid monthly, quarterly, half-yearly or yearly and you can choose whether you want this to be paid up front or in arrears. For example, annuities paid yearly in arrears (payment starting at the end of the first year) will be higher then annuities paid yearly in advance (payment starting immediately), and annuities paid monthly in advance, over the course of a year will pay more than a yearly in advance.

Level Annuities
If you select an income that does not increase, you will generally receive a much higher initial income than an annuity that does increase. However you should bear in mind that, as time goes by, the real value of your income will be eroded by the effects of inflation.

Increasing Annuities
If you are worried about the effect inflation may have on your retirement income, you can choose to have your income increased each year. If you opt for an inflation proofed annuity you will receive a smaller starting income compared with a level annuity. However, you will have the peace of mind knowing the real value of your income is protected. You can choose for your income to increase in line with inflation and therefore maintain its buying power or you can choose a fixed percentage increase each year such as 3% or 5%.