How secure is the annuity?
In other words, “what happens to my annuity income if the insurance company goes bust?” The Financial Services Compensation Scheme (FSCS) exists to protect people who take out any sort of regulated UK insurance or investment contract, and annuities fall under the definition of a long term insurance contracts. The FSCS would initially work with the insolvency practitioner to try and arrange continuity of cover for policyholders either by transferring the business to another provider, or by getting another provider to issue substitute policies at the level of ninety per cent of the benefits immediately prior to the insolvency. However, if this could not be done, the FSCS would instead pay out compensation to policyholders with eligible claims in accordance with the usual insurance sub-scheme limit, which is ninety per cent of the claim with no upper limit. More detail is available on the FSCS website at http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/insurance-
