Enhanced annuity rates apply if you suffer from a medical condition(s) (mild or serious), take prescribed medication, or smoke regularly, and you could be eligible for a far higher retirement income. This could be significantly higher than the income offered to a healthy individual depending on the severity of the medical condition(s). Put simply, this is because those eligible for these increased rates have lower than average life expectancies.
What follows are a couple of different examples of medical conditions, and the annuity quotes that could apply to each. These quotes are shown against two benchmarks: leading standard annuity rates and the lowest published rates from the Financial Services Authority’s (FSA’s) comparative tables, and the quote you have from your own pension company might lie between the two. These figures demonstrate clearly the different levels of retirement income that can apply and the wide range of rates available. If you have a serious illness, you could get over 75% more income.
These examples are all based on 65 year olds with a £50,000 pension fund.
(A) Medical Condition: In good health, but taking 2 medications to control blood pressure and a statin to keep cholesterol low.
Male Female
Annuity quote (p.a.) £3766 £3555
(A) Monthly equivalent £315 £296
% return / approx annuity rate 7.5% 7.1%
(B) Leading standard quote £298 £279
% difference (A) to (B) 5.4% 6.2%
(C) FSA lowest published quote £257 £238
% difference (A) to (C) 22.3% 24.4%
(B) Medical Condition: Rheumatoid arthritis, needing help with most activities of general living, e.g. washing and dressing, and needing to use a stick for walking.
Male Female
Annuity quote (p.a.) £4082 £3876
(A) Monthly equivalent £341 £323
% return / approx annuity rate 8.2% 7.9%
(B) Leading standard quote £298 £279
% difference (A) to (B) 14.2% 15.8%
(C) FSA lowest published quote £257 £238
% difference (A) to (C) 32.3% 35.8%
The message is clear, make sure when you are shopping around for annuity quotes that you disclose any medical conditions. It’s the only way to get the best annuity rates and the best retirement income.