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Enhanced annuities explained

pensions & retirement

Enhanced annuities explained

Learn more about enhanced annuities and how they can be used to get a higher retirement income because of your health and lifestyle choices.

What is an enhanced annuity?

If you have a reduced life expectancy, an enhanced annuity may offer a higher retirement income than a regular annuity. 

When your annuity income is calculated, providers consider your estimated life expectancy. If your provider thinks your life expectancy is lower than average, they may give you a higher (or enhanced) annuity.

How much more could you get with an enhanced annuity?

Since annuities provide a guaranteed income for the rest of your life, the amount you get will be based on life expectancy. 

Poor health can boost this annual income by as much as 30% or more depending on which provider you choose and their criteria for the seriousness of your condition.

Who qualifies for an enhanced annuity?

Different providers may have different criteria. The main conditions that qualify for an enhanced annuity are: 

  • smoking 
  • diabetes 
  • high blood pressure 
  • heart disease 
  • cancer 
  • kidney failure

Providers may also provide enhanced annuities for other conditions depending on how serious they are. These include asthma, high cholesterol, obesity and rheumatoid arthritis.

How can I get an enhanced annuity?

When you approach retirement and are looking for an annuity, you will need to disclose all your health and lifestyle issues. The quotation form you will complete is fairly standard across all annuity providers. Qualifying for an enhanced annuity requires you to meet certain criteria, your provider will make a judgement on how much your ill health affects your lifestyle and you will be offered a suitable annuity.

You may wish to seek professional advice when looking for an annuity as it is an area prone to scams.

Enhanced Annuity FAQs

It is important you understand the pros and cons of annuities. Click here to read our guide to annuities. One risk is your pension pot cannot be inherited if you have purchased an annuity - although some providers would continue paying a reduced sum to your spouse.

Some providers will continue to pay out a reduced amount to your spouse after your death. If you are healthy but your spouse is not, then you may be eligible for a joint-life annuity where you are both covered.

As there are so many options and choices to make with joint-life annuities, we recommend seeking financial advice.

For more advice about enhanced annuities, including a calculator to help determine what you could get, follow this link to the government’s Money Advice Service.

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