What is a fixed-term annuity?
A fixed-term annuity pays a guaranteed income for a set period — commonly three to 25 years — and then returns a guaranteed maturity value you can use to buy another annuity, move into drawdown, or take as cash. It is a halfway house between the certainty of a lifetime annuity and the flexibility of drawdown, letting you lock in income without committing forever.
| Provider | Typical term range | Maturity value | Best for |
|---|---|---|---|
| Canada Life | 3–25 years | Guaranteed | Flexible term lengths |
| Just | 3–25 years | Guaranteed, enhanced options | Health-based enhancement |
| Legal & General | 5–15 years | Guaranteed | Strong financial backing |
| Aviva | 3–25 years | Guaranteed | Existing customers |
| Standard Life | Fixed terms | Guaranteed | Bridging to State Pension age |
Why choose a fixed term?
Fixed-term annuities suit people who want guaranteed income now but expect circumstances or rates to change. A common use is bridging the gap to State Pension age — for example, a 60-year-old taking a five-year fixed-term annuity to provide certain income until 67. Others use them to lock in today's high rates without betting that rates will not climb higher.
The trade-off
Because some of your money is returned at maturity rather than spent on lifetime income, the income from a fixed-term annuity is usually lower than a lifetime annuity. You also carry reinvestment risk: when the term ends, annuity rates may be lower, so the maturity value might buy less guaranteed income than today.
Verdict
Canada Life and Just lead for flexibility and term choice, with Just best if health factors qualify you for an enhancement. Legal & General and Aviva suit those prioritising a household-name insurer. Compare lifetime rates in our best annuity rates guide, check enhancement in our enhanced annuity guide, and weigh the flexible alternative in our best drawdown providers guide.