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What are Enhanced Annuities?

When it comes to declaring health information, be it filling out a health check at the spa or telling the doctor how many units of alcohol you consume each week, for many, there’s an urge to lie and shine yourself in the best possible light.

But, when it comes to pensions – honesty is always the best policy!

At My Pension Expert, we’ve spoken to thousands (over 10,000, in fact!) of people who are nervous about declaring health and lifestyle-related information about themselves. But in reality, those who have been forthcoming with this detail have tended to see a bigger pension pot at the end of it.

How can an enhanced annuity increase your income?

If you have suffered with or are currently suffering from ill health, you may be eligible for a medically enhanced annuity or impaired annuity. These are the terms given to policies that consider the health of a retiree and as a result, they can offer the highest income because they are based on past or present medical conditions. Most annuity providers take the view that certain health problems will lead to a shorter life expectancy so they are prepared to pay a higher income.

Over 1500 medical conditions on their own or in combination, qualify for an enhanced income. In some cases, minor illnesses may qualify too, so taking a medical before choosing an annuity, could be prudent.

Lifestyle habits can also have a huge impact. Which is why, being honest about disclosing information about drinking, smoking and weight, is essential. Thanks to a customer’s open discussions with us, we helped him secure an extra 26% income for the rest of his life. He did this by simply sharing information about his weight, where he lives, his occupation and how much he smokes each day.

Thanks to the independent and transparent nature of our advice, all our customers enjoy bespoke annuity quotations specifically matching their personal circumstances. We’re not tied to specific pension products and use our unique technology to provide the best value deals in the marketplace.

So, what’s our advice?

As well as being honest and open with information, be happy to shop around (that’s where we can help!). And, if you think you might qualify for a medically enhanced annuity or impaired annuity, here are some helpful points to remember:

The most serious medical conditions will offer the highest income rates;

The date of an illness diagnosis and prescribed treatment will affect your policy;

Some serious medical conditions will have a lower enhancement as time passes from initial diagnosis, particularly with some forms of cancer;

Basic death benefits can be very cost-effective and will only reduce your income in a very small way;

Fixed term annuities can include other types of death benefits, such as value protection which may be worth investigating.

Enhanced annuity rates can be achieved if your spouse has medical problems and spouse protection is selected.