An Enhanced Annuity, sometimes known as an impaired life annuity, can pay you a significantly higher income than a standard annuity if your health or lifestyle means your life expectancy may be shorter than average. If you smoke, take regular medication, or have a medical condition, you could be entitled to considerably more income for the rest of your life.
Am I Eligible for an Enhanced Annuity?
You may qualify if you can answer yes to any of the following:
- Do you regularly smoke, or have you smoked within the last 10 years?
- Do you take any regular prescribed medication?
- Do you have high blood pressure or high cholesterol?
- Do you have diabetes or chronic asthma?
- Have you ever suffered a serious illness such as cancer, a stroke, a heart attack, angina or multiple sclerosis?
- Have you recently undergone major surgery?
- Is your Body Mass Index outside the standard healthy range?
If you’ve answered yes to any of these, let us know — we’ll check whether you qualify for an enhanced rate, usually by asking you to complete a short, straightforward questionnaire.
How Does an Enhanced Annuity Work?
Like a standard annuity, an Enhanced Annuity pays a known, guaranteed income for the rest of your life in exchange for your pension fund. The difference lies in how the income is calculated. Insurers assess your health and lifestyle alongside the usual factors of fund size, age and the options you choose, and where your life expectancy is assessed as shorter than average, they offer a higher income to reflect this.
Conditions That Could Qualify You
There are over 1,500 medical conditions and lifestyle factors that insurers may take into account, including:
- High blood pressure or high cholesterol
- Diabetes
- Heart conditions, including heart attack and angina
- Cancer
- Stroke
- Multiple sclerosis
- Respiratory conditions, including asthma
- Kidney or liver problems
- Smoking, being significantly overweight, or regular alcohol consumption above recommended limits
Even where you don’t have a diagnosed condition, certain occupations or where you live can sometimes affect the rate you’re offered, so it’s always worth checking.
Benefits and Risks
Benefits
- A guaranteed income for life, based on the options you choose
- A known, secure income that’s easy to budget around
- No ongoing investment decisions or investment risk
- Protection against any future fall in annuity rates
Risks
- Once set up, your annuity options can’t be changed to reflect future changes in your circumstances
- You won’t benefit from any future rise in annuity rates once your annuity is in place
- A level annuity income won’t keep pace with inflation over time
- An escalating annuity typically starts significantly lower than a level annuity
- If you choose a single life annuity with no guarantee period and die shortly after it starts, no further payments are made, meaning you or your estate may not recover the full amount used to purchase it
How Much More Income Could You Get?
The uplift you receive depends entirely on the nature and severity of your condition, so we avoid quoting a single figure that applies to everyone. As a guide, more serious conditions tend to result in a larger increase, while milder factors such as being a smoker or carrying some extra weight can still result in a meaningful uplift. The only way to know your exact figure is to compare quotes based on your personal circumstances.
Why It’s Always Worth Checking
Many more people qualify for an enhanced rate than realise it — conditions that seem minor on a daily basis, such as well-controlled high blood pressure or being a former smoker, can still result in a better rate than a standard annuity. It costs nothing to check, and there’s no obligation to proceed.
How We Help You
We ask you to complete one simple questionnaire about your health and lifestyle, which we then send to every enhanced annuity provider on our panel — there’s no single “best” provider for everyone, so we check the whole market on your behalf. It’s rare that a medical examination is required; in some cases we may ask for a supporting report from your doctor. Once we have responses, we compare them against your existing pension provider’s offer and present you with the best option available, with the decision always remaining yours.
It’s important to be open and complete about your health and lifestyle when answering the questionnaire — understating a condition could mean missing out on a higher income you’re entitled to.
What If My Partner Has Health Conditions?
If you’re considering a joint life annuity and your spouse or partner has a health condition or smokes, this could still result in an enhanced joint income, even if you yourself are in good health. Our guide to joint life annuities explains how the options work for couples.
Prefer a quote specifically for an Enhanced Annuity? Get your Enhanced Annuity quote →
Enhanced Annuities: Common Questions
What is an enhanced annuity?
An enhanced annuity pays a higher income than a standard annuity to people whose health or lifestyle suggests a shorter than average life expectancy. Because the provider expects to pay the income for less time, it can afford to pay more each year. It is sometimes called an impaired life annuity.
What conditions could qualify me for an enhanced annuity?
Over 1,500 medical and lifestyle factors can qualify, and they are not limited to serious illness. Common examples include high blood pressure, raised cholesterol, diabetes, heart conditions, asthma, a history of cancer or stroke, being a current or former smoker, above-average alcohol consumption, or being overweight.
How much more income could an enhanced annuity pay?
It varies considerably depending on your individual circumstances, and not everyone will qualify for an enhancement. Where conditions do apply, the increase can be significant — in some cases up to 60% more than a standard rate. The only way to know your position is to be assessed.
Why does declaring health conditions increase my income?
With most financial products, declaring health problems works against you. Annuities are the opposite. Because the provider is paying an income for the rest of your life, a shorter expected lifespan means they can offer more each year. The more you disclose, the better your rate may be.
Do I need medical evidence to apply?
Usually a detailed questionnaire covering your conditions, medications, dosages and diagnosis dates is enough. Some providers may request a GP report for certain conditions. All information is treated in the strictest confidence and used only to obtain the best available quotation for you.
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We will not provide you with advice or recommendations as part of our annuity comparison service — we research the whole of the market and present you with the best available rates, and it is your decision how to proceed. The level of income uplift available depends entirely on your individual circumstances and is not guaranteed, and not everyone will qualify for an enhancement. An annuity cannot normally be changed or cancelled once set up, and will not be right for everyone. Annuity rates can go down as well as up. Free impartial guidance is available from MoneyHelper. Retirement Professionals Ltd is an appointed representative of pi financial ltd, authorised and regulated by the Financial Conduct Authority. FCA number 622943.