Annuities?

[ynnafymmi]

How do annuities work(i.e whole life annuities)?My auntie put £100,000 into an annuity which pays her £12,000 a year.That equates to 8 and a bit years,but suppose my auntie lives for another 30 years.Surely the annuity company will lose a lot of dosh over these years,or does the annuity company just hope that auntie drops down dead tomorrow?

[ynnafymmi]

What kind of investment is that,Tony?Do you lose everything if(God forbid)you die tomorrow?I think if my auntie dies tomorrow(God forbid)her investment dies with her.

[fiction-factory]

That's what an annuity is. It's an option that suits some who want certainty. I'm not a great fan and wouldn't put everything in one but can see case for having some of portfolio as a annuity.
I know someone who took £500000 as a combination of lump sum and SIPP , and the SIPP lost £150000 in March due to Covid, and now wishes an annuity had been taken for some of it

[TonyV]

Yes ff the offer pension company that took over our company scheme was to good to refuse, they even paid the £3000 to my adviser.

[ynnafymmi]

I take it you were in excellent health,Tony.However auntie is or was far from being in best of health.