What are Enhanced Annuities?

The reason why most financial experts recommend that you fess up to any lifestyle habits or medical conditions that you may have while speaking to a pension provider, is that you may qualify for a higher retirement income.

A lot of people find it too embarrassing to admit the fact that they have been leading an unhealthy lifestyle all their lives or that they may have a medical condition that can reduce their life expectancy.

But while planning for retirement, it becomes a crucial necessity that you own up, because your health condition can determine your cost of living in the years to come.

So, if you are eligible to get a higher monthly income, why wouldn’t you want to take it?

An enhanced annuity is an additional income that eligible retirees can receive if their life expectancy is lower than the national average.

Some pension providers also call it an impaired life annuity or smoker annuity. Statistics reveal, that in the UK, up to 60% of retirees may qualify for some type of enhancement in their annuity.

The Eligibility

Impaired annuities were first introduced in the year 1995 in the UK. Since then, new medical conditions and lifestyle conditions have been constantly added to the list.

Some of the conditions that may make you eligible for an enhanced annuity are:

  • Heart Disease
  • Cholesterol
  • Diabetes
  • Cancer
  • Smoker
  • Parkinson’s disease
  • Stroke
  • Hypertension
  • Angina

These are, of course, just some of the conditions that may make you eligible. If you receive an impaired annuity quote, ensure that you provide all valid details to receive the highest rate.

If you omit any valid information, your potential income may be reduced.

How much more income will I receive?

1. Lifestyle Related Conditions: If you have lifestyle-related conditions then you may be eligible for up to 18% more income than what the highest standard annuity can pay you. Some of the lifestyle conditions that qualify are obesity (BMI of 34 or more), smokers (people who smoke less than or more than 10 manufactured cigarettes per day), smokers who have stopped smoking recently (mostly in the last 6 months) and those taking prescription medicines for high blood pressure or cholesterol.

2. Impaired Health conditions: Impaired health conditions like diabetes, cardiac problems or cancer can make you eligible for up to 40% more income than what a standard annuity can pay you. Graver conditions can qualify for a higher enhancement rate. For example, people who may develop diabetic neuropathy or are suffering from asthma may qualify for a higher rate. These are not the only conditions though. Thousands of other health conditions can be considered as an impaired health condition, especially if it can have permanent effects on a person’s life. For example, paralysis or stroke which can affect the way a person moves or lives their life every day.

How to get the best rate

Just because your pension provider gives you a quote for an enhanced annuity, that does not mean you jump to conclusion and sign up.

The rule of thumb is that if you shop around, you may always get a higher rate.

  • Get impaired annuity quotes from multiple annuity providers
  • Mention as many details as possible about your medical condition. For example, if you have asthma, do you use a face mask or have breathlessness attacks?
  • If you qualify for lifestyle conditions, do not be ashamed to own up about the number of cigarettes you smoke each day. For example, someone who smokes more than ten cigarettes in a day may qualify for a higher amount than someone who smokes less than ten a day.
  • Ask what your options are regarding the annuity amount in the event of your untimely death. Can the annuity amount be paid to a dependent spouse or children for the rest of their lives?
  • Ask what the tax implications are.

The annuity provider may also require your medical files or ask you to undergo further medical checkups to ensure that you are eligible.