Enhanced Annuities Where Poor Health = More Wealth
As we edge closer to State Pension age and full-time retirement, we become more aware of time and how precious it is.
You may have already counted the years you think you’ll have left to enjoy all the things you want to do after you retire.
You also might be worrying whether you’ll have enough money to pay your living costs and have some left over to spend on enjoying your retirement.
And, if you’ve suffered with a health condition during your life, you may worry even more, particularly if you think you’ll need to pay for care at some point in the future.
It’s not very often you hear that illness could work in your favour, however poor health can equal more wealth, especially if you qualify for an Enhanced Annuity pension.
What is an Enhanced Annuity?
An Enhanced Annuity, sometimes called an Impaired Annuity, is the only pension product that will pay you more if you have a medical condition or engage in lifestyle choices that could affect the number of years you are expected to live.
Depending on the severity of the illnesses you have, the amount you smoke or drink or weigh, an Enhanced Annuity will pay you a larger chunk of your retirement income upfront, than a healthier annuity customer, who is expected to live longer.
What is an Annuity and how does it work?
An annuity is a pension product that pays you a lump sum on retirement and a guaranteed income for as long as you live.
Pension wise, when you retire, you have the option to buy an annuity with the funds from your pension pot, or take out an income drawdown product.
The money you use to pay for an annuity is combined with the pension funds of other pension annuity customers. This makes up one large annuity fund, which is invested by your annuity provider.
Your regular annuity income is then paid out of this larger pot of money.
Because an annuity is guaranteed to pay you a set amount for life, the payment you actually receive depends on the type of annuity option you choose, the interest rate, and your general health.
When working out your annuity rate, an annuity provider will take into consideration any medical conditions or underlying health issues you have.
In addition they will want to know about your lifestyle choices and whether they are detrimental to your health, such as smoking and drinking alcohol, or being very overweight.
The annuity provider will calculate your life expectancy based on this information and gauge how much they will need to pay you during your lifetime.
The healthier you are and the longer you are expected to live, the less money you’ll receive.
How much will I get with an Enhanced Annuity?
Enhanced annuity rates can vary depending on a number of factors, including your state of health, lifestyle and age, fluctuations in interest rates and Gilt bond prices.
There are only a handful of providers that offer Enhanced Annuities. The increased amount you could qualify for varies between an additional 9-35%.
It’s best to ask a regulated financial adviser to help you before you start your search, so you can be sure you have explored all the options available to you.
Who qualifies for an Enhanced Annuity?
You could qualify if you have lifestyle conditions caused by smoking, drinking alcohol or obesity, and have a medical condition or illness, such as
- Heart Disease
- High blood pressure
- Kidney Failure
Other types of conditions, including Asthma, high cholesterol, and Rheumatoid Arthritis may also be taken into consideration.
The amount your annuity payment is enhanced by will depend on the severity of your condition. The more serious it is, the higher the income you could receive.
For example, if you’ve had one or more heart attacks during your lifetime, you could receive as much as a 31% increase to your regular annuity payment.
How do I qualify for an Enhanced Annuity?
The first part of the process is to complete a Common Quotation Form which will include information about your health and lifestyle. This forms the basis for an annuity provider to calculate how much they will offer to pay you.
As annuities can be complex, it’s important to seek the help of a financial adviser. We strongly advise using an adviser who is regulated and experienced in annuity pensions. In particular, one who is familiar with helping clients qualify for enhanced annuities.
How CS Retirement Solutions can help you qualify for an Enhanced Annuity?
We will arrange an appointment with you so we can understand your retirement needs and pension options. Following this we will go through the Common Quotation Form with you.
It is our duty as a regulated Financial Adviser to ask you about your health and lifestyle choices, so we can include all the information the providers will need to make an accurate offer.
For this reason, it’s important to be completely honest about your lifestyle habits and the severity of your health-related impairments.
If your health changes after you’ve bought your enhanced annuity, the amount you receive cannot be altered.
Once completed, we will send the form to all the providers offering enhanced annuities to request their quotations. This will raise your chances of finding the highest annuity payment available on the market.
Call us today to find out how much an enhanced annuity could benefit you.
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