This is the risk that if you voluntarily withdraw or die before the end of the fixed term, you may receive back less money than you invested and less money than you would have received had you held the annuity for the full investment term. The withdrawal value of the annuity will vary over time because it depends on changing factors, including how long you’ve held the annuity for and prevailing market rates at that time. 

Any lump sum payable on death during the investment term is calculated similarly to the withdrawal value for voluntary withdrawal, and so this risk also applies to withdrawal on death.

To protect against this risk of early death and receiving back less money than you invested, you can nominate a single beneficiary to continue receiving the regular payments until the end of the fixed term. If you have chosen to have the investment amount returned to you at the end of the fixed term, then the beneficiary will also be paid that amount at the end of the fixed term.

Government policies and laws may change in the future, which may impact your personal circumstances. In such circumstances, we may be required to change the terms and conditions of your fixed term annuity if changes to tax or other laws impact your investment or, if necessary, to comply with any law, ruling or determination of any relevant government authority.

We will generally notify you in advance of any material change to your policy and in any event as soon as practicable after the change. Where a change is not materially adverse to you, we will give you notice of the change no later than 12 months after the change has occurred.

The Fixed Term Direct annuity offers fixed payments that remain the same throughout the term, with no increases to account for inflation. 

If you are concerned about this we have other options available with our full suite Fixed Term annuity. Where you have asked to have the full invested amount returned to you throughout the fixed term, we offer the option of indexing your regular payments each year in line with changes in the Consumer Price Index (CPI) or by a fixed percentage you choose.

This is the risk that we become unable to meet our commitments to you. However, we are subject to detailed legislative and regulatory requirements designed to ensure that this does not occur.

Challenger Life is regulated under the Life Act and the prudential standards made under it, which prescribe minimum capital and solvency requirements for Challenger Life as well as for the annuity business it writes. APRA actively supervises Challenger’s compliance with these requirements, which are designed to ensure that we are able to meet our obligations to investors. For example, Challenger Life is required to hold at least enough capital to withstand a one in 200-year investment market shock event. APRA can require us at any time to change how we invest or tell us to invest more capital into the fund.

Even so, unforeseen and extreme circumstances that might impact our ability to make payments to you can never be completely ruled out.