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How much do you really know about annuities?

Over the last two years more than £4 billion in pension wealth has been exchanged for a secure income, making annuities one of the most popular retirement income options available - but do you fully understand them?

Take this quick quiz to test your annuity knowledge - a secure choice.

Good luck!


Question 1

  1. You have to be at least 65 to access your pension and buy an annuity. True or False?

    You can usually access your pension from as early as 55 (rising to 57 from 2028). You might be able to access your pension sooner if you have a protected retirement age or you're unable to carry out your occupation due to ill health.

  2. Up to 25% of your pension can be paid to you as a lump sum before buying an annuity. True or false?

    You can normally take up to 25% of your pension as an initial tax-free lump sum. The rest can then be exchanged for a secure lifetime income, which (like all income from your pension) is taxable. You don’t have to access all of your pension in one go. It’s possible to stagger the process, meaning you can take your tax-free cash in stages too. Tax rules can change and any benefits will depend on your circumstances.

  3. Your existing pension provider will always give you the best possible rate. True or false?

    Loyalty is rarely rewarded, and your existing pension provider might not offer you the best income rate. It’s vital you shop around and make sure you’re getting the best deal possible. You can check what your current provider offers, and if any special guarantees apply, by contacting them. Then take the time to compare their rates against the whole market. Just follow the link at the end of this quiz to use our annuity comparison engine. You should remember, once set up, an annuity cannot normally be changed. Annuity rates also fluctuate, so what could be seen as a bad rate today could be a great one in years to come and vice versa.

  4. You get less for your money if you have medical conditions. True or false?

    Having health and lifestyle conditions will often mean you qualify for a higher income. Even if you have minor conditions or are fit and healthy, it's still worth confirming basic details like your height, weight and alcohol intake. Last year 1 in 2 of our individual annuity clients qualified for an enhanced rate.

  5. When you die the income from your annuity will always stop. True or false?

    There are options you can build into your annuity which mean your income could continue to your spouse or partner when you die. This will mean your yearly income is reduced, but could mean more income is paid out overall. You'll need to select these options when you apply, and can't change your mind later on. Our guide to annuities explains the options in more detail – simply follow the link at the end of this quiz to claim your copy.

  6. You can select an annuity income which will increase in line with inflation. True or false?

    You can choose an annuity that remains level (i.e. you get exactly the same amount of income each year) or one that increases. You can choose for it to increase by a set percentage each year or in line with inflation. Choosing one of these options will reduce your initial income, but could protect your annuity’s buying power in the future. Claim your annuity guide at the end of this quiz to learn more.

Your final score