Updated: June 11, 2019

Enhanced annuities

A guide to enhanced annuities

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Tony Stevens

Author: Tony Stevens - Finance Expert

Updated: June 11, 2019

Aside from having your regular pension pot to provide retirement info, you may choose to invest some of it into pension products such as an annuity. Annuities give you an additional regular income but there are considerations you need to be aware of before you decide to take one out. For example, if you suffer from poor health or have a particular health condition, you may be eligible for an enhanced annuity. But what does it involve and how do you go about applying for one and get the best deal?

In this article we’ll be covering the following topics about enhanced annuities:

What is an enhanced annuity?

In a regular annuity you receive a fixed sum of money, usually paid monthly as part of your pension earnings. If you suffer from specific medical conditions or health problems however, you may be eligible for an enhanced annuity, whereby you’ll receive a higher amount of annuity, possibly up to 27% more income.

An enhanced annuity provider will usually offer more favourable rates if your life expectancy is shorter due to a health or lifestyle condition, as it’s assumed you’ll die earlier than those who don’t have health conditions.

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What is impaired life annuity?

Impaired annuity is the same as enhanced annuity. It’s simply another name for it. So anything you read about impaired life annuities, applies to enhanced pension annuity too.

Which medical conditions are covered in order to qualify for enhanced annuities?

The first thing to note is that not all annuity providers offer enhanced annuities. If yours does, it will come with terms and conditions stating what the enhanced annuity qualifying conditions are. Typically, however, the main enhanced annuity conditions are:

  • Cancer
  • Diabetes
  • Heart conditions (such as heart disease or history of heart attacks)
  • Smoking (and conditions related to you being a smoker)
  • High blood pressure
  • Kidney failure (and related conditions)
  • High blood pressure

Less serious conditions

The above list refers to the most serious health conditions and if you have one, you should receive higher impaired health annuities. In addition, there are some conditions that are less serious (there are approximately 1,500 medical and lifestyle conditions) which may result in you getting a slightly higher rate of enhanced annuity, but not as much as the life-threatening ones.

This includes if you suffer from asthma, high cholesterol, have rheumatoid arthritis or are considered clinically obese. Depending on the nature of the condition you’ll get an increase in your annuity payments, but the rate is set by your provider so may vary.

How can I get the best enhanced annuity rates?

Annuities are a product usually offered by insurance companies and rates and terms and conditions will vary between different providers. They will take into consideration factors like your health and lifestyle, how much is in your pension pot, current annuity rates and your age, as the older you are, the more annuity you’re likely to receive.

Generally speaking, annuities are typically attractive to high earning individuals and you’re more likely to be accepted for one if you have earned an above average salary or are an investor.

How do I compare the enhanced annuity market to get the best quote?

The best starting point is speaking to an expert who can compare the market on your behalf and advise on the options that are available. The pensions experts we work with can offer bespoke advice and give you an enhanced annuity quote of how much you could expect to receive, especially when it comes to the best enhanced annuity rates.

Give us a call on 0808 189 0463 or make an enquiry and we’ll put you in touch with one of the enhanced annuity market experts that we work with.

How do I find the best enhanced annuity providers?

It’s important that you shop around before you settle on an enhanced annuity provider as they all offer different rates, but you don’t need to do the legwork yourself.

In order to find enhanced annuity providers in the UK it’s quickest and easiest to speak to an expert. This is something we can help you with. Simply get in touch and we can connect you with a pensions and annuity expert. There’s no obligation, the service is free and it’s then up to you if you want to continue the conversation.

It’s important to be aware though that expert advice is advisable and you shouldn’t make decisions about your pension without it.

Are there any risks with taking out an enhanced annuity?

You need to fully understand what will happen to your investment before you decide to take out an annuity. Considerations include what will happen when you die – typically any monies that haven’t been paid out to you are kept by the provider and can’t be inherited.

Other considerations include whether there are any charges, how inflation rates could affect what you receive, what taxes you’ll need to pay, what your current health is like and whether you have any dependents. These are all topics you should discuss with an expert before you make your final decisions as once you decide to take out an annuity it usually can’t be reversed.

Can an enhanced annuity calculator tell me how much I’ll get?

Just like you can find online annuity calculators that tell you how much mortgage you could qualify for. There are also enhanced annuity calculators that tell you what enhanced annuities rates you could expect. However, they only offer an estimation.

You can’t be sure of what your actual rates will be until you talk with a pension expert, like the ones we work with. Make an enquiry to speak with one today.

Speak to an enhanced annuities expert

If you have any other questions regarding enhanced annuity or how to get the best enhanced annuity rates in the UK, give us a call today on 0808 189 0463 or make an enquiry here. We’ll put you in touch with one of the experienced specialists that we work with who can give you advice tailored to your own personal circumstances.

So sit back and let us do all the hard work in finding the pension advisor with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation.

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We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.

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Tony Stevens

Tony Stevens

Finance Expert

About the author

Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

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