Annuities Explained Enhanced Annuity

Enhanced annuities

A common mistake people make, when buying annuities, is not taking advantage of their medical conditions in order to gain a higher income. As many as one in three people could be eligible for a higher income due to their poor state of health.

Enhanced annuities are another form of annuity, providing you an income based on your age and life expectancy due to health conditions. So if you are suffering with a health condition, or are a smoker, you will get a better annuity rate by taking out an enhanced or impaired life annuity. This type of annuity works on the assumption that a person with poorer health will take fewer payments than a healthier person of the same age, therefore giving you a higher pay out each year because the insurance company will have to pay out for a shorter period.

Impaired Life Annuity

Those with serious and life threatening medical conditions such as cancer can purchase an ‘impaired life’ annuity, which offers even higher rates again.

It is very important that when thinking of taking out an enhanced annuity you seek independent financial advice from an IFA, (independent financial advisor), as the decisions you make now, determine the income you receive for the rest of your life. You will also need to contact your pension provider, who will provide you with important information. There is, for example, also an opportunity to get an enhanced joint income if your partner smokes or is also suffering from ill health.

Thinking of Retiring Soon? Have a look at our Annuity Comparison Table


Income Increase

The level of income you receive will depend upon the extent your condition will affect your life expectancy. Mild condition’s or lifestyle choices affecting your health could see your income increase by up to 5%.

Like for other annuities, you will have to fill out a health questionnaire in order to find out your medical entitlements and any other health related issues that may affect your income throughout your life. The annuity provider will make their decision based upon an estimation of how long you are expected to live, taking in to consideration factors such as your lifestyle habits, general health and whether or not you are a smoker; the shorter the estimated life expectancy, the better the rates that will be offered to you.

Example Illnesses

Examples of the types of illnesses that can enable you to take out an enhanced annuity include:

  • Cancers, including leukemia and Hodgkin’s disease
  • Diabetes
  • Stroke sufferer
  • Heart conditions such as heart attacks, heart bypass, angina, irregular heartbeats and angioplasty
  • Multiple Scleroses
  • Parkinson’s disease
  • Lung disease
  • Liver disease

There are over 1,500 known conditions that can affect your life expectancy, so if you have ever taken prescription medication or been hospitalised for a period, be sure to make a note of it. However trivial it may seem, you may find it gets you a better Annuity rate.

Related Articles

Buying an Annuity Explained

Annuities for people with Poor Health

Types of Annuity – Overview

Annuity Enquiry

  • Recommend Us - With Google Plus One