An enhanced annuity or an impaired life annuity may be appropriate for individuals who have a medical condition, a lifestyle condition, or who regularly smoke, and where this may affect their longevity. As the income from an annuity contract is affected by potential life expectancy, those with medical problems may receive an increased retirement income by taking out this type of annuity, and research has shown that up to 40% of retirees could obtain enhanced rates, yet only a tiny proportion of actually apply for enhanced annuity rates.
To qualify for an enhanced or impaired life annuity a medical assessment will be done. If, for example, you suffered a couple of heart attacks over 10 years ago and there have been no recurring symptoms then it is likely that you will not be eligible for enhanced rates. However, if you or your partner have suffered from or currently suffer from life threatening illnesses or could be expected to have a reduced life expectancy on certain medical grounds then an enhanced annuity may offer you an uplifted rate, of up to possibly 75%, relative to standard annuity rates.
In addition to individuals who suffer from serious medical conditions such as a heart attack or cancer, less serious ailments such as obesity or diabetes might also qualify for impaired life annuity rates. Some other diseases such as chronic obstructive pulmonary disease and certain forms of cancers, have decreased in their prevalence. Others, though, such as obesity and diabetes, have grown rapidly in terms of numbers of sufferers, and can be taken into account by underwriters.
Applying for an enhanced annuity involves a process of medical underwriting, as you might expect. This is where the insurance company will carry out an assessment of your life expectancy based on your medical details. They might request to see your medical records or they might ask you to attend a medical examination, although this is only likely for larger cases.
These days Life Style Annuities are increasing in their popularity. By opting for such the individual can expect an income that will take into account various factors surrounding their lifestyle and background which could potentially affect their life expectancy. For example, an office worker may be expected to live a fair bit longer than someone who was a coal miner all their life. A non-smoker would also be expected to live longer than a smoker.