An enhanced annuity (also known as an impaired life annuity) can increase the income from your pension by as much as 27%. It pays you a higher income than a conventional annuity because of your health or lifestyle conditions.
What is an enhanced annuity?
If you were to take out life assurance you would usually be penalised for being in poor health and would have to pay a higher premium that what is known as the “standard risk”. But with annuities, a health condition can be beneficial to the rate at which the pension is paid.
Enhanced annuities work on the assumption that your life expectancy is reduced if you have certain medical or lifestyle conditions. Annuity providers see you as someone that they'll have to pay for less time than someone in a better state of health. Therefore they compensate you by paying you a higher income, essentially using up your pension pot more quickly. This higher income is paid for life, even if your health improves or you change your lifestyle!
Do you qualify for an enhanced annuity?
You don't have to be seriously ill to qualify; there are currently over 1,500 medical and lifestyle conditions which could increase your annuity income. Your life expectancy will be assessed based on health and lifestyle conditions to ascertain the seriousness of your impairment. Remember to be completely honest about the degree of your illness! The uplift you’ll get depends on the seriousness of the condition, but even If you smoke, are overweight, drink alcohol regularly or take any prescribed medication you could qualify for enhanced rates and more income.
If you or your partner answer “yes” to any of the following questions, you may qualify for an enhanced annuity.
Do you smoke?
Have you been diagnosed with high blood pressure, requiring ongoing medication?
Have you suffered a heart attack requiring hospital admission?
Have you been diagnosed with cancer (excluding skin cancer and benign tumours) requiring surgery, chemotherapy or radiotherapy?
Have you been diagnosed with Parkinson's disease?
Have you been diagnosed with Multiple Sclerosis?
Have you taken early retirement on the grounds of ill health?
Have you been diagnosed with diabetes, requiring insulin or tablet treatment?
Have you suffered from a stroke (CVA), excluding mini-strokes (TIAs)?
Tips to get the best enhanced annuity
Be honest. Declare everything about your health and lifestyle – don’t hold back or you could lose out.
Declare everything about your partner’s health and lifestyle. You could still get an enhanced joint income even if you’re in fantastic health but your partner is in poor health or a smoker.
Shop the whole market. There isn't a single 'best' provider for everyone which is why we get quotes from every enhanced annuity provider in the market. These quotes can vary on a day by day basis.