By Ruth Richards
Over 1,500 reasons why you might be eligible for an enhanced annuity
All of us want to make the most of our retirement. If you’ve contributed to a pension pot over the years, it’s important to get the best secure pension income you can, and one way of doing this is attaining the best annuity possible. If you decide to purchase an annuity with your pension, your health could have a major part to play in boosting your retirement income through what’s known as an enhanced annuity.
In plain English, for those with medical or lifestyle conditions, an enhanced annuity pays an increased income, for life.
Even minor conditions can qualify.
If you take prescribed medication; suffer from ill health or if you are a smoker, you could qualify and increase your retirement income. In fact, there are over 1,500 health conditions that could enhance your annuity including:
- Parkinson’s disease
- High blood pressure
- High cholesterol
- A heart attack
- Taking regular prescribed medication
Investigations carried out in October 2012 by Hargreaves Lansdown Annuity Supermarket and Just Retirement showed certain medical conditions that could result in an increase to your annuity by up to 55%. Based on a single life and level, five year guaranteed annuity paid monthly in arrears, a 65 year old male with a pension fund of £25,000 and an average rated postcode, could see the following increases, assuming the lowest healthy rate was £1278 per annum:
With annuity rates getting progressively worse, it is a sensible option for anyone considering the purchasing of an annuity to bear in mind their health, especially considering that more than half the UK population could be eligible for an enhancement according to Just Retirement(2). In the UK, approximately 2.8 million people are affected by diabetes(3), 1 in 3 people will develop cancer in their lifetime(4) and 30% of people in England have high blood pressure .
Applying for an enhanced annuity (also known as an ill-health or impaired annuity) is straight-forward. On occasion, the insurance company may contact your doctor to verify your details or sometimes ask for further information.
However, once set up, your annuity cannot usually be cancelled or changed, so ensuring you have disclosed all of your health conditions should result in the best annuity rate possible. Almost half (48%) of Hargreaves Lansdown’s clients received an enhancement to their annuity in last year - you could too. Visit the Hargreaves Lansdown website for more information on annuities, enhanced annuities and to find out how much your pension might pay.
Figures from Just Retirement, as per our website: http://www.hl.co.uk/pensions/annuities/smoker-ill-health