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LV= report clarifies the role of fixed term annuities

Press release: 11/10/2012

Retirement specialist LV= has published a ‘Fact and Fiction’ report for advisers, to highlight the various personal circumstances and market changes which make fixed term annuities a beneficial choice for clients.

For example, the findings of the report indicate that a modest increase in gilt yields could make a fixed term annuity a worthwhile strategy for many more retirees. In fact, the report shows that if gilt yields returned close to the average yield seen between 1994 and 2012, a fixed term annuity would be appropriate for most clients.

In addition, if a client has a spouse that is in very poor health, they could also benefit from not locking into a lifetime annuity rate at outset if the spouse’s benefit is over 50%, or if the spouse is materially younger than the main applicant. A fixed term annuity should also be considered if a client has or is likely to develop a medical condition[1] that could then qualify them for an enhanced rate of 20% or more further down the line.

Steve Lewis, LV= Head of Distribution said: “We believe there are many circumstances where fixed term annuities provide a higher overall income in retirement, and our report gives advisers solid data proving that in the right situation, fixed term annuities add real value.

“It is important that those at and approaching retirement have a choice as to how they structure their income and fixed term annuities can offer greater flexibility, especially with the advent of break clauses. LV= is committed to the fixed term annuity market as we believe there is a strong role for these products to play in people’s retirement. We want to support advisers and help them to feel confident discussing fixed term products with clients, so in conjunction with our report we will soon be running a series of adviser webinars on the fixed term annuity market.”

Leading actuarial consultancy Milliman was commissioned by LV= to provide the modeling for the comparisons used in the report.

To request a copy of the report financial advisers should email

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  1. If a client has a medical condition that may well deteriorate over time, or where the family history suggests that there is a high likelihood of a client contracting a condition that would mean they qualified for an enhanced rate.


LV= employs 5500 people and serves over five million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trades unions.

LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG.

Registered address: County Gates, Bournemouth BH1 2NF.