When you buy a lifetime annuity you hand over part, or all your personal pension fund to the annuity provider in return for a guaranteed income. This will last for the rest of your life.

If you are considering buying a lifetime annuity, you may be wondering ‘what happens to my annuity when I die?’.

When taking out a lifetime annuity you can choose the features you wish to include. The features you select will determine what happens to the annuity after your death. These can include value protection and guarantee periods. As well as opting for these benefits, you can also set up the annuity as a joint life annuity.

You should be aware that the options you include will affect the amount of income you receive.

Single life annuity

If you take out a single life annuity and do not add any death benefits, your annuity payments will stop once you die. So, if you do not select value protection or a guarantee period nothing will be payable to your loved ones. A single life annuity with no death benefits could be suitable if:

  • You have no financial dependants.
  • Your partner has enough income from their own pension arrangements.
  • Or if they have a condition likely to mean they have a shorter life expectancy than you.

Choosing a single life annuity with no death benefits could be unsuitable if you want to provide for your financial dependants after your death.

Joint life annuity

A joint life annuity will provide you with a guaranteed income for life. It will also provide an income for your named spouse, civil partner, or financially dependent partner, should you die before them. This income will then be paid for the rest of their life.

The income paid to your named spouse or partner will be a percentage of the income you were receiving before your death. You can only choose this at the point of buying your joint life annuity. The higher the percentage that you set, the lower your income will be. This could be a good option if:

  • Your partner does not have their own pension arrangements.
  • Or they have insufficient pension savings to manage financially without your income.

As the annuity provider is assessing the life expectancy of both of you, your initial income will usually be lower than a single life annuity. So, it’s important to consider your financial needs as a couple to establish what is right for you.

For more information on single and joint life annuities, see our ‘single vs joint annuities’ guide.

Guarantee periods

If you take out an annuity with a guarantee period and die early, your annuity income will continue to be paid to your beneficiaries for the rest of that period. A guarantee period is set when you buy your annuity. You can choose a period between 1 and 30 years, although some providers will only offer 5 or 10 years.

Here is an example. You choose a 10-year guarantee period and die after 5 years. Your annuity income will continue to be paid to your named beneficiary or estate for a further 5 years after your death.

If you die after the 10-year guarantee period, nothing is payable after your death. Unless you also selected a joint life annuity, and your partner survives you.

Bear in mind, the longer the guarantee period you choose, the lower your annuity income is likely to be. This is because it is guaranteeing to be paid for that minimum period.

Value protection

Value protection (also known as capital protection) is a death benefit that allows you to protect all, or part of the pension fund used to buy your lifetime annuity. This option can return a lump sum to your named beneficiaries or estate if you die without having received the selected proportion of your pension fund.

For example, you paid £100,000 for your single life annuity and selected 50% value protection (£50,000). If the total of the gross income payments you received was £40,000 at the time of your death, your chosen beneficiary or estate will receive £10,000 as a lump sum.

If your policy has already paid out more than the selected protected amount, there will be no lump sum paid out after your death.

Key points

  • When buying an annuity, extra death benefits include value protection or guarantee periods.
  • If you have not chosen any death benefits when buying your annuity, nothing will be payable after your death. Unless you select a joint life annuity and your partner lives longer than you.
  • The amount of tax you pay on your income is treated like your salary. It depends on your total income for the tax year and your tax rate.
  • If the total value of your pension funds when taken exceed the lifetime allowance, you may have extra tax charges to pay.
  • Lifetime annuity payments from value protection, guarantee periods and joint life annuities are normally tax-free. This applies if the original annuitant is under 75 when they die.
  • Income due under guarantee periods and joint life annuities are subject to tax at the marginal rate of the recipient. This applies if the original annuitant is 75 or over when they die.
  • Payments under value protection or a guarantee period may be subject to inheritance tax.

We have based this information on our current interpretation of UK tax rules (December 2023). Tax rules and regulations are subject to change and how they affect you will depend on your personal circumstances.

Should I choose to protect my annuity?

If you die in the early years of your annuity plan, the total income you receive may be less than the amount used to buy the annuity. Selecting a death benefit, either value protection or a guarantee period, offers some protection against this.

If you have a spouse, partner or financial dependants who rely on your income, adding death benefits to your annuity could offer peace of mind. It may be reassuring to know that your family may receive some financial support when you are no longer able to provide for them.

But you need to consider your needs. Adding these features could have a significant impact on the level of income you receive.

Seeking advice before taking out an annuity

Once you take out a lifetime annuity, you have a 30-day cancellation notice period. After this, you can’t change your mind, or change or remove any death benefits you add to your annuity.

So, it's crucial you understand your options, so you can make an informed decision that’s right for you and your circumstances.

Our friendly customer service team can help you complete your lifetime annuity application. They can talk you through the different options available to you. But, as a non-advised service, we can’t provide you with financial advice.

We recommend the following government service as a source of reference:


You are entitled to free and impartial guidance from Pension Wise, a government service from MoneyHelper. If you are aged 50 or over, you can receive tailored guidance online, over the phone or face-to-face to help you understand your retirement options.

0800 011 3797

If you need further assistance, you may wish to get in touch with an independent financial advisor. You can find a local financial advisor on the MoneyHelper site or see our guide on how to seek advice before purchasing an annuity.

Compare lifetime annuity rates

If you’ve decided a lifetime annuity is right for you, we can help you to compare annuity rates. You can add or remove death benefits so you can see the effect on your potential annuity income.

All you have to do is complete one online form and we can help you compare guaranteed quotes from all providers in the annuity open market. We aim to help you secure a higher income for your pension savings.