Can You Take Advantage of an Enhanced or Impaired Life Annuity?
21 Sep 2010
By The Now Team
The amount of monthly and annual income you are going to have in retirement is probably one of the most important considerations in later life. Many decisions about your lifestyle, home and wealth hang in the balance. Therefore since a pension is, for many, the primary source of income, it becomes increasingly important to get the best annuity deal that will yield you the returns you require to lead the life you want. However, new research conducted by Just Retirement suggests that many pensioners, although legible, are not taking advantage of schemes that could earn them more income.
Annuity providers have developed a number of schemes to help offer a fair annuity rate to suit an individual’s needs and circumstances. One such scheme that typically offers higher rates is an impaired or enhanced annuity, as it assumes the individual has a decreased life expectancy. This scheme considers a wide range of habits and conditions (for example if you are a smoker) that may impact life expectancy and therefore offers a higher rate. The research finds that around 55-65% of 65-74 year olds could potentially be eligible for these products yet the uptake is still relatively low at only around 12% according to Towers Watson consultancy.
So, what are the typical conditions that are considered? Well, the list is very extensive and covers around 1,500 conditions. To add to the complexity, companies may vary what they count for the enhanced annuity. However, typically they range from serious conditions, for instance cancer, heart disease or a heart attack, to more minor conditions such as diabetes. Therefore, its certainly worthwhile checking out this option if you feel you may be eligible and get the most from your retirement pot.