Annuity question

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noggy1810

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If you have a PRSA and retire you can take 25% tax free and you are supposed to invest the rest in an annuity. An annuity agrees to pay a certain amount of money each week for a certain amount of time. What happens to your lump sum invested if you die before this time has elapsed after taking out annuity?
 
The lump sum is used by the life office to purchase an annuity. If there's no guarantee period, or spouses pension associated with your own pension, then the payment stops when you die. The lump sum has already been spent.

Instead of purchasing an annuity with the balance of your fund, you would also be entitled to purchase an AMRF/ARF.

This link might help you understand more about annuities. http://www.iapf.ie/Infosource/FAQ/Q...its/DefinedContributionSchemes/#_Toc130201528
 
So if you die 1 month after purchasing your annuity for say 1million its tough on those left behind or will they continue to pay to next of kin until the period of time agreed is up?
 
depends on what guarantee period you nominate when you purchase the annuity. If you nominate 5 years it will be paid for 5 years no matter what.

And if you live 40 years it will be paid for 40 years, which would be worth more than the cost at the time of retirement.

Its a form of insurance - expect instead of insuring against death (life assurance) - you are insuring for living a longer life.
 
An annuity offers you a guaranteed income for the rest of your life.

In addition to guaranteeing you an income for the rest of your life, an annuity can guarantee to you a minimum period of payment. This means that, if you purchase this option and you die before your chosen period is over, the Life Office will continue to pay an income, for example, to your spouse or dependants. Should you not die during this period they will continue to pay you your income for the rest of your life.

You can usually choose guaranteed periods of 5 or 10 years.

You may also choose to take your annuity as a single or joint life annuity. If you choose to purchase a joint life annuity, in the event of your death if your spouse is still alive the Life Office will continue to pay an income to your spouse for the remainder of his/her lifetime. You can decide what proportion of your income will continue to be paid (e.g. 100%, 66.67%, 50%).
 
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