Enhanced Annuities, Ill Health and Rich Rewards
Updated: 7th March 2009
Enhanced Annuities
Missed opportunities for those with health issues. By Stephen Hill, of S Hill & Co Investment Advisors.
Believe it or not, some aspects of ill health or bad health habits can reap rich rewards, but many people missing out on a higher income in retirement.
In a period of recession, it is most important that those who have built up pension funds are getting the highest possible income for their money, and yet the majority of pension pot owners still take the annuity with their existing provider without taking independent financial advice to ensure the highest possible income is payable from the funds available.
It is important that this exercise is carried out by all pensioners-to-be, as different providers will offer different annuity rates and income levels for the same pension fund. However, it can be even more advantageous to those who are wishing to take an income from their pension fund, who have a habit such as smoking or a history of ill health.
There are currently 12 providers of enhanced annuities in the market, which can be considered and we set out below three examples of how an income in payment in retirement can be greatly increased by researching the market.
Example One – Single Life Level Annuity (i.e. no spouses’ pension) - Male policyholder aged 65 with a history of mild angina – Purchase Price £100,000.
Best Available Standard Rate |
£7,348 per annum |
Best Enhanced Rate |
£8,718 per annum |
Example Two – Single Life Level Annuity (i.e. no spouses pension) – Female policyholder aged 65 with a history of heart problems – Purchase Price £100,000.
Best Available Standard Rate |
£6,874 per annum |
Best Enhanced Rate |
£8,327 per annum |
Example Three – Joint Life Level Annuity – (i.e. 50% spouse’s pension on death of Annuitant) – Male policyholder aged 65 and spouse aged 65 both in good health but with a smoking habit of 10 a day – Purchase Price £100,000.
Best Available Standard Rate |
£6,587 per annum |
Best Enhanced Rate |
£7,869 per annum |
Source Assureweb/TheAnnuity Bureau/Defaqto at 29/01/09.
Reviewing pension funds to ensure the highest possible income is paid to clients in retirement through the purchase of an annuity is always recommended as it does pay to shop around.For more information:
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