Enhanced Annuity

Secured Loans

Specifically for people in poor health...

Enhanced (or impaired) annuities are specifically for people in poor health. Usually with financial products poor health means a worse deal but the opposite is true with annuities. A medical condition could mean up to a 50% higher income.

Enhanced annuities pay more each year on the assumption they won’t last as long as a standard annuity. The annuity providers assume that because you have a medical condition you will have a shorter life expectancy than a healthier person and they will be paying you for less time. They compensate you for this by paying you a higher income. Obviously the higher the income, the faster your pension savings decrease, but the theory is you’ll need them for less time.

The main conditions that qualify for an enhanced annuity are: diabetes; smoking; heart disease; high blood pressure; kidney failure and cancer, but there are over 5,000 different conditions that will be considered by providers. Depending on their seriousness other examples are obesity, rheumatoid arthritis, liver disease, asthma, stroke, organ transplant and high cholesterol or you may qualify if you’re taking medication for an illness or have recently been to hospital.

Increase your annual retirement income with an annuity...

Compare Quotes

The seriousness of your condition will dictate how much increased income you receive compared to a conventional annuity. Type 2 diabetes for example may entitle you to a 30% higher income; asthma 21% and multiple heart attacks 31%. Even being over-weight could provide a 15% increase.

Your life expectancy is calculated using a ‘common quotation form’, which is usually filled out with your financial advisor and then sent to multiple providers. The form assesses your health and lifestyle and you may need to provide supporting evidence from a doctor, but it’s rare for a medical examination to be requested. It’s important to be honest and declare past as well as present illnesses. Your payments won’t increase if your condition deteriorates.

Industry figures suggest approximately 20% of all annuities sold are enhanced annuities, although industry sources say that 60% of applicants could qualify for some degree of enhancement, so it may be worth considering, even if you feel your ailment a minor one.

As with a conventional annuity, should you outlive your pension pot, an enhanced annuity will continue to pay. There are a number of different types of annuity available, on which more information can be found in our annuities buying guide.