Enhanced Annuities / Impaired Annuities
Make sure you recognise the best advice when you get it
Understanding enhanced annuities
It's estimated that 60% of people could qualify for an enhanced annuity. You could be eligible for an enhanced annuity if:
- You smoke
- You have ever taken prescription medicine
- You have ever been hospitalised for a medical condition
- If you are in advanced years
So if you're of advanced age, a smoker or are in poor health (or have been in poor health), you may be able to increase your pension income.
Some annuities, called "Enhanced Annuities" or "Impaired Annuities", pay more than basic annuities because those that are in better health tend to live longer than average. Annuity providers therefore have to pay out more over a healthier person's retirement lifetime so, because of this consideration, the yearly income is usually lower.
This is why it is extremely important to report any medical condition to your adviser, no matter how small you think it is. It may result in you receiving a higher pension.
You may regard yourself to be in relatively good health and therefore not eligible for an enhanced annuity, but the reality is often different. Many think they have to suffer from a serious medical condition such as cancer, stroke or heart disease to receive extra retirement income - this is not always the case. What to some may seem a minor condition or complaint may significantly increase your annual income.
In fact, if you have just one of nearly 1500 conditions, such as being overweight, a digestive complaint, high cholesterol, asthma, high blood pressure, diabetes, heart problems etc., please make sure you mention it to your annuity adviser.
Additionally, higher incomes are often achieved by:
Smokers of ten or more manufactured cigarettes per day
Those who have retired from certain occupations, especially manual workers
Those who live in certain areas of the country defined by postcodes
It is thought that up to forty percent of the UK's population could increase their pension annuity income with an enhanced annuity. If you believe that you fit into that category, it is crucial that you tell your annuity adviser about it. You'll stand a much improved chance of a higher retirement income for the rest of your life.
Annuities for Smokers
If you smoke, annuity providers factor in that you are likely to die sooner than a person who doesn't smoke. Therefore they assume that they will not be paying you your retirement income for as long a period. A presumed shorter life-span means that being a smoker can boost the amount of income you will receive from your annuity.
So, as a smoker, you may already be eligible to receive a higher income, but also, dependent on your age, you may receive further enhanced annuity rates of up to 30 percent above the standard level annuity rates.
Why use an annuity broker?
1. An annuity broker may be able to secure a better annuity deal than you may be able to achieve.
2. A broker is more likely to have access to a wider range of annuity possibilities than you.
3. Due to their ongoing relationships with annuity providers, they may be in a better position than you to overcome any problems which may arise with your application.
4. You will have an expert point of contact should anything go wrong or need prompt attention.
5. They work to a set of guidelines laid down by the FSA who regulate annuity brokers' policies and working methods.
6. Annuity brokers have got an interest in recommending the correct product for your particular circumstances. They will not wish to fall foul of stringent FSA annuity regulations.
7. If you choose not to get FSA registered annuity broker advice, you may not be able to get compensation through the Financial Services Compensation Scheme if you have a future complaint about the recommended annuity.
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Please complete the free no-obligation enquiry form to contact your personal adviser and see the surprising differences between one annuity and another. Remember your enquiry is free.
There is no charge for us investigating your policy and you are under no obligation to follow any recommendations that are made.
By using a broker's service you will get advice that is paid for by the annuity company. You will not have to pay them a fee as your broker will receive a commission payment direct from the recommended annuity company. Your adviser's costs are already factored into the income that you are offered by the annuity provider. Commission is paid, but this can be refunded should you wish to pay via a fee.
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