3 min Read
20 Sep 2010

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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Money tip #104 – Consider an Impaired Life or Enhanced Annuity

Enhanced annuity and impaired life annuity

Kahn / FreeDigitalPhotos.net

One way smokers, the overweight and those with medical conditions can boost their retirement income.

It is possible for people with a perceived reduction in life expectancy to receive a higher annuity income in retirement. To put it bluntly, this reflects the fact that the annuity providers will in all likelihood only have to pay an income for a reduced period of time. These types of annuity of annuity fall into two categories:

  • Impaired Life Annuities and
  • Enhanced Annuities.

Both provide a higher annuity income than a standard annuity.

What is an Impaired Life Annuity exactly?

To quote the Pension Advisory website ‘’an impaired life annuity pays an income for life in the same way as a lifetime annuity.  However, it pays a higher income to those suffering with certain medical conditions on the basis that they have a reduced life expectancy.  Medical conditions include, but are not limited to, high blood pressure, diabetes, heart conditions, kidney failure, certain types of cancer, multiple sclerosis and chronic asthma. An annuity provider will normally ask for a report from your doctor.  They do this to make sure that the details in your application form are correct’’ and that you are eligible for an impaired life annuity.

So what is an Enhanced Annuity?

The Pension Advisory website defines an enhanced annuity as ‘’normally [being] available for regular smokers, but can also benefit people who are overweight. An enhanced annuity may also be available if you have spent a good proportion of your working life in a hazardous occupation, such as mining.’’

So if you fall into any of the ‘risk’ groups you should consider looking into taking out either an Impaired Life annuity or an Enhanced annuity when you retire.

How do I find out if I’m eligible and how do I apply?

It is possible to get ‘smokers only’ impaired annuity figures from this handy annuity comparison tool from the Money Advice Service.

However you will need to employ the services of an Independent Financial Advisor in order to apply for an enhanced or impaired life annuity as only selected insurers provide them. But it may be well worth the effort.

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