Annuity on Death: Guaranteed Periods and Joint Annuities Explained

Single-life annuity with no guarantee

The simplest and historically most common type. The annuity pays income for as long as the annuitant lives — and stops completely on death. Nothing is paid to the estate, the spouse, or any other beneficiary.

This type offers the highest income because there is no residual value. The annuity provider retains any "unspent" capital if the annuitant dies shortly after purchase.

The executor should notify the annuity provider of the death so that payments are stopped. There is nothing further to claim.

Guaranteed period annuities

A guaranteed period (also called value protection for a fixed term) means the annuity continues to pay for a minimum period — typically 5 or 10 years from the date of purchase — regardless of whether the annuitant is alive.

If the annuitant dies within the guarantee period:

• The remaining guaranteed payments continue — they may be paid as a lump sum (the discounted value of remaining payments) or as ongoing income installments
• Payments go to the nominee named on the policy, or to the estate if no nominee is named
• If paid as income, they are taxable as income in the recipient's hands
• If paid as a lump sum, the discounted value is taxable as income

The executor must notify the annuity provider and request the remaining guaranteed benefits. These form part of the estate (if paid to the estate) or pass outside the estate (if paid directly to a named beneficiary).

Joint-life annuities

A joint-life (or joint and survivor) annuity continues to pay after the death of the first annuitant. The survivor receives payments — typically at a reduced rate compared to the original income.

Common survivor rates are:

• 50% — the survivor receives half the original income
• 66% — the survivor receives two-thirds
• 100% — the survivor receives the full original income

On the death of the first annuitant, the executor should notify the provider. The surviving spouse or partner will then receive the reduced income directly — it does not pass through the estate (it is a personal benefit of the survivor).

On the death of the second annuitant, the annuity ends completely (unless there is also a guarantee period provision).

Value-protected annuities

A value-protected (capital-protected) annuity returns to the estate any of the original purchase price that has not yet been "used up" by payments made. The calculation is:

Remaining capital = Original purchase price − Total payments received in the annuitant's lifetime

This remaining capital is paid as a lump sum to the estate on the annuitant's death. It is subject to income tax (at the recipient's marginal rate) if paid to an individual beneficiary, or 45% tax if paid to the estate and certain conditions are not met.

Value-protected annuities typically offer lower income than unprotected annuities because the provider retains less risk.

IHT treatment of annuity death benefits

Annuity death benefits that are paid directly to named beneficiaries (not to the estate) are generally outside the estate for IHT. This applies to joint-life continuing payments and nomination-based guaranteed period payments.

Benefits paid to the estate (because no beneficiary was named or the policy requires payment to the estate) do form part of the taxable estate for IHT. For the full IHT context, see our inheritance tax UK 2026–27 guide.

Practical steps for the executor

1. Locate the annuity policy documents
2. Identify the type of annuity and any death benefit features
3. Contact the annuity provider promptly with the death certificate
4. Ask for a statement of any remaining death benefits payable
5. Determine whether benefits are paid to the estate or directly to a beneficiary
6. Obtain confirmation of the IHT treatment of any lump sum benefit

For the general estate administration process, see the estate administration checklist, complete UK probate guide 2026, and applying for probate guide. For pension and retirement income context, see our frozen deferred pension guide and overpaid pension guide. For collecting estate assets, see our collecting assets after probate guide. For the IHT400, see our IHT400 guide. For executor first steps, see our executor first steps guide. For distributing the residuary estate, see our distributing the residuary estate guide. Farra can help — get started here.