An annuity is an income, purchased using a lump sum, this is typically payable for life, although term annuities are also available.

You can purchase an annuity in two ways:

• Make one lump-sum payment to purchase a single-premium annuity. If you want to contribute more money at a later date, you will have to purchase another annuity.

• Make ongoing contributions to a flexible-payment annuity. You can contribute money at regular or even irregular intervals anytime you want.

A very important point to remember when setting up your annuity.

1.  Not all annuity providers are equal. The difference between the best and worst annuities can be huge.

With an immediate annuity, you can rest safe in the knowledge that your income will never run out or decrease. Once your annuity is set up your chosen option of income is fixed, so it is important to choose your options carefully.