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5:00Annuities: Income for Life, and the Mortality Bet Inside
Hand an insurer £100,000 and it promises to pay you a cheque every month until you die, whether that is next year or in 2060. The trick that makes this possible is that the people who die early quietly fund the people who live long.
An annuity is a deal with an insurer: you hand over a lump sum, usually a pension pot, and in return the insurer pays you a guaranteed income for the rest of your life. The amount it offers per year as a percentage of your pot is the annuity rate. In June 2026, with rates at multi-decade highs, a healthy 65-year-old buying a single-life level annuity could get roughly 7%–7.9%, so about £7,000–£7,900 a year for a £100,000 pot, paid until death no matter how long that is.
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