What happens if the company paying my annuity goes bankrupt?
It may be the case that another annuity provider would step in and take over the 'annuity book of business' in which case, it is possible that you may continue to receive your full annuity
If this doesn't happen, annuity business is treated the same as 'long-term' life insurance and in the event your annuity company should have financial difficulties and be unable to continue to pay you your annuity income, you would be covered under the Financial Services Compensation Scheme.
Under the scheme, compensation in respect of long-term life insurance is unlimited. You would be paid the first £2,000 of your annuity in full and 90% of the remainder, without upper limit.
Note:
If you had a with profits annuity, only guaranteed bonuses already attaching to the policy will be included in the compensation scheme. Discretionary bonuses would not be covered.
