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Enhanced AnnuitiesYour lifestyle can have a huge affect on your annuity

When an annuity company calculates the rate of annuity they are prepared to pay an individual the singularly most important issue they take into account is the life expectancy of the applicant as this is the period of time that they expect to pay out


Traditionally this was calculated using mortality tables, these being actuarial tables that show the average age of death for people around the UK. In more recent years specialist annuity companies have recognised that an individual who smokes, drinks or is overweight will on average die sooner than those who lead a healthy lifestyle. This has lead to the birth of the enhanced annuity.


In addition to this other factors that contribute to a shorter life expectancy such as where an individual lives in the country and past occupations have also started to be considered when an enhanced annuity rate is calculated.


Statistically, an ex foundry worker from Middlesbrough might have a shorter life expectancy than an accountant who lives in Surrey so the annuity company expects that income payments will cease earlier an now this is reflected in the annuity rate.


Who could benefit from an Enhanced Annuity?


It is a fact of life that the older we become the higher the incidence of being diagnosed with a medical condition, what is surprising, is just how many people who live in the UK could qualify for an enhance annuity.


The following table shows the top five conditions that qualify for an enhanced annuity rate and the number of people who suffer with condition in the UK.

*Source NHS Choices:


Enhanced annuity provider MGM advantage estimate that around 70% of retirees could be missing out by not shopping around at retirement and using an open market option where medical information and lifestyle questions are used to ascertain whether the retiree will qualify for enhanced annuity income.


What lifestyle factors are considered?


While some lifestyle factors might not contribute on their own, when considered in combination with another lifestyle factor they could give an enhanced annuity rate. For example someone who lives in a postcode area that is near a busy road or an industrial area might not qualify, but if the same person was also a taxi driver during their working life, then the combination of residence and occupation could qualify for an enhanced annuity.


Interestingly, if a spouses/dependent’s pension has been selected the annuitant could be fit and healthy but the addition of a spouse/dependent with lifestyle or medical conditions could qualify for an enhanced annuity.


Medical Condition

Number of people affected in the UK*







High Blood Pressure


Chronic Obstructive Pulmonary Disease






It is now a medical fact that smoking related illnesses will shorten the average smokers life expectancy and this has been reflected by the number of specialist annuity providers that offer smoker’s annuities, in fact specialist smoker annuity provider Reliance Mutual won’t offer an annuity to anyone who does not smoke.


tick Over 10 Million people smoke in the UK.


tick The average amount of cigarettes smoked is over 12 per day.


tick Over one fifth of the population smoke.


tick Typically, enhanced rates are offered to those individuals that have smoked continuously for more than ten years and are smoking at the time of application.


tick Once they have qualified for a smoker’s enhancement and the annuity is in force the annuitant can kick the habit without penalty.



How much does smoking affect annuity rates?


Where a non smoker might have an income of £10,000 per year someone who smokes 10 cigarettes per day could expect £11,960! An increase of over 19%. The following graph shows the typical enhancement for smoker’s annuities.


Smoking effects on annuities


Obesity- How being overweight can affect annuity income.


Being overweight and certainly being classed as obese can also give a significant enhancement to an annuity applicant. Statistics show that people who are significantly overweight can suffer a range of linked medical problems such as diabetes and heart problems all of which can enhance the risk of a heart attack or stroke. Obesity has also been linked to some forms of cancer.


  • Enhanced annuity companies recognise that these conditions can lead to an early death and this is reflected in the annuity rate offered. Depending on an applicant’s BMI (Body Mass Index) the annuitant can qualify for an enhanced rate without any other medical conditions.
  • Applicants with a lower BMI might not qualify unless they have additional medical issues for example high blood pressure.
  • Typically a BMI over 30 could potentially lead to an enhanced annuity if in combination with another contributing factor.
  • A BMI over 34 would qualify on its own.
  • Over 60% of adults are classed as overweight with around one quarter being classed as obese.


The NHS offer a useful BMI calculator to check BMI


Alcohol Consumption


How much someone drinks on a regular basis will also contribute to an enhanced annuity if in combination with another medical or lifestyle issues and if consumption is over certain levels this will qualify on its own.  An increased income could be awarded where people drink more than 40 Units of alcohol on a regular basis each week.

Drink aware offer an easy to use calculator to help calculate alcohol consumption.


High Blood Pressure


One of the most common enhancements for annuities is given for High Blood pressure


tick (Hypertension) with over 7 Million people suffering with the condition in the UK.


tick Being diagnosed with high blood pressure and taking just one medication or more will lead to an enhanced annuity ranking.


tick The date of diagnosis, number of medications prescribed and the latest blood pressure reading can contribute to further increase in annuity income.


tick Almost one third of adults in the UK have high blood pressure. BPA, 2011


High Cholesterol


High cholesterol diagnosis and prescribed medication can also entitle a retiree to an enhanced annuity income.


tick Almost two thirds of the adult population have higher than recommended cholesterol levels. NHS 2011.


tick The higher the number of prescribed medications and type of prescribed medication can lead to further enhancement.


tick Cholesterol levels increase with age and men are more likely to suffer.


tick Both high blood pressure and high cholesterol in combination with other lifestyle or medical factors can increase the annuity income still further.



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