Do you know enough about enhanced annuity rates and impaired life annuity rates to understand whether you’re eligible for these pension annuities? Certain people can get higher annuity rates from annuity providers based on their state of health, or if they smoke on a regular basis. The reason is simple; if you do suffer from ill health, or, indeed, if you smoke, then you are not likely to live as long in retirement so the annuity provider will offer a better rate to you. You need to provide comprehensive medical details, and your application will be fully underwritten based on your precise circumstances.
These higher impaired life or enhanced annuity rates can result in a rate that is 30% or more higher than the best standard annuity rates. These type of annuities are becoming more and more popular, because even those with minor conditions, such as high blood pressure, obesity, or high cholesterol can be eligible for a better rate with enhanced annuities. Impaired life annuities apply to those with more severe ailments and can result in far, far, higher retirement incomes.
The downside of this for the more healthy annuitants is that it will tend to drive down annuity rates applying to them. The reason for this is that unhealthy annuitants who purchase a standard annuity and then die early are currently subsidising the pension annuity rate for healthier individuals who live longer than the UK average. If more of the unhealthier people are seen buying into enhanced annuities then this cross subsidy will have a lesser effect, potentially pushing down standard annuity rates.
