Enhanced Annuities | Money Saving Advisors
Find out how health and lifestyle factors can qualify you for enhanced annuity rates and more income.
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Your health could boost your income
If you smoke, have high blood pressure or a medical condition, you might qualify for an enhanced annuity. That means higher income for life, simply because of your health or lifestyle. It's a smart option that many people overlook - and it could make a real difference in your later years.
What makes an annuity "enhanced"?
An enhanced annuity (also called an impaired life annuity) gives you more income than a standard one, based on your life expectancy. The idea's simple: if providers expect to pay you for a shorter length of time, they'll offer higher monthly payments now. Here's what might qualify you:
- Health conditions
Conditions like diabetes, cancer, heart disease, high cholesterol, or a history of strokes can all qualify. - Lifestyle factors
It's not just about illness. Smokers, heavy drinkers, and those with a high BMI may also qualify. - Multiple conditions
The more serious or numerous your conditions, the more likely you are to qualify - and the higher your rate.
Unexpected upsides of poor health
If you qualify, enhanced annuities can dramatically change your retirement outlook. Many people don't know they could be entitled to more - just by being honest about their health.
- Better value pension savings
Enhanced annuities can stretch your savings further by giving you a higher guaranteed income. - Peace of mind with no risk
Your income is fixed for life - and the boost from health-related factors only adds to that security. - No downside to applying
There's no penalty for checking. You'll still be offered a standard rate if you don't qualify. - You may already qualify
Even common conditions like high blood pressure or taking medication could work in your favour.
Summing up
An enhanced pension annuity is a smart option if your health and lifestyle choices could affect your life expectancy. It's a chance to turn challenges into positives, and there's no harm in applying. You've saved for retirement - now it’s time to make that money work as hard as it can.
Frequently Asked Questions
Do I need a medical exam to get an enhanced annuity?
No - in most cases, you won't need an exam. Instead, you'll fill out a health and lifestyle questionnaire, where you'll be asked about any conditions, medications, and habits like smoking or drinking. Some providers may ask for permission to contact your GP for details. Giving accurate information helps you get the best possible income from your pension.
What's the difference between a standard and enhanced annuity?
The key difference is how your pension income is calculated. A standard annuity gives everyone the same rate based on age and pension pot size, assuming average life expectancy. An enhanced annuity considers your personal health and lifestyle. If there's reason to believe your life expectancy may be shorter, you may be offered a higher income. It's a way of personalising your retirement income and making sure you get more value from your savings.
Will it affect my annuity if I lie or withhold information?
Yes, it could have serious consequences. If you deliberately give false information or leave out details about your health or lifestyle, your annuity provider could reduce your income or stop payments altogether. In some cases, they may ask you to repay overpaid amounts. Transparency is key - it makes sure your income is accurate, fair, and protected. Remember: even small or manageable conditions like high blood pressure can sometimes improve your rate.
How do I apply for an enhanced annuity?
Applying is easy and usually starts with your pension provider or a financial advisor. When getting quotes, ask specifically for enhanced annuity rates and fill out a health and lifestyle questionnaire. You may be asked about current medical conditions, any medication you're taking, and your lifestyle. Be sure to compare quotes from several providers, as the difference in income can be significant.
Are enhanced annuities subject to income tax?
Yes, your enhanced annuity is subject to income tax. While you can usually take a tax-free lump sum (or tax-free cash) from your pension first, any annuity income you receive after this counts towards your annual earnings. You'll pay income tax on annuity payments that go over the standard personal allowance, which is currently £12,570. The higher tax rate (40%) starts at £50,271.
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