Enhanced or Impaired annuity what is the difference?

An enhanced, or impaired, annuity will pay a higher income to people with health problems or where their lifestyle is likely to reduce their life expectancy. Here at annuitysupermarket.com we are always striving to get the best annuity rates for our clients. One question we are always being asked is, “What is the difference between an enhanced annuity and impaired annuity?”

Enhanced annuities

Enhanced annuities are available for lifestyle factors such as smoking or being overweight, even your postcode can qualify for an enhanced annuity rate. Taking prescribed medication for miWhat you need to remember is you do not need to be ill to qualify for enahnced annuity rates. Here are a few quick reminders of what might qualify:

  • Smoking – 10 cigarettes a day for the last 10 years (or the equivalent cigars or tobacco)
  • Obesity, high cholesterol, hypertension
  • High blood pressure and diabetes mellitus

Impaired Annuities

Impaired annuities are those that use a medical condition that may significantly reduced life expectancy. A medical report may be required from your doctor. The following medical conditions will be considered:

  • Heart attacks, heart surgery or angina
  • Life threatening cancers
  • Chronic asthma
  • Major organ diseases e.g. liver or kidney
  • Other life threatening illnesses such as Parkinson’s, multiple sclerosis and strokes

Retirement – Have you got a plan?

AnnuityIts surprising how many people enter retirement without a plan. Would you plan a car journey without a map or indeed these days taking your sat-nav? No! I doubt very much you would, so why do so many retirees drift into retirement without a plan?

At least 6 months before your intended retirement date you need to write yourself a checklist, this article will give you a few pointers to help you plan. We have all heard that well known Cliché “fail to plan, plan to fail” well it is so true.

So lets start with a few things you need to organise:

  • Annuity – Are you aware how much income yours will provide?
  • State Pension – Have you obtained a forecast of your state pension entitlement? You can get a BR19 form or go online at the Direct.gov website
  • Life Insurance – Once you finish work will your family still have the vital protection in the event of your death?
  • Will – Have you made a will?
  • Emergency fund – Do you have an emergency fund set aside for any unforeseen spending requirements?
  • Benefits – Have you investigated what you may be able to claim, e.g. Council tax benefit?

Now that list is just for starters, I am sure you can add a few of your own.

If your pension provider has not contacted you at least 6 months before you retire then you need to call them and get a retirement benefits pack from them. It is so important to get an idea on what income your retirement annuity will provide so you can plan your retirement expenditure.

Enjoy your retirement!!

Enhanced Annuities

Annuities are a guaranteed income for the rest of your life. When you purchase an annuity you do so normally on the following criteria:

  • Fund size
  • Age
  • Gender
  • Annuity Options purchased

The annuity provider gives you an annuity rate based on their opinion of your life expectancy. So the longer you are expected to live the lesser the rate the provider will give you. On the flip side of course if you have a shorter life expectancy then you will get a better annuity rate.

This is where enhanced annuities come in.

What exactly are enhanced annuities?

An enhanced annuity is one that pays out a higher rate than conventional lifetime annuity based on the fact that your life expectancy is regarded as lower. Enhanced annuity providers base this on things like:

  • Whether your smoke and how many.
  • Whether you take regular medication.
  • The postcode where you live, in some cases.
  • Your height and weight.
  • Whether you’ve ever been hospitalised with a medical condition before.

If you take medication for a heart condition then you may have a lower life expectancy than those who do not. Therefore, annuities providers expect that they’ll be paying out your income over a much shorter period of time and will offer you an Enhanced Rate Annuity.

How Do I know if I qualify for an Enhanced Rate Annuity?

Industry figures suggest as many as 40% of retirees could qualify for an enhanced rate annuity, which could increase income by anything from a few percent to 60% for a serious medical condition.

If you have some of the conditions mention you may qualify. Get a quote for enhanced annuities

Lifetime Annuity

A Lifetime Annuity, once purchased will tie you in to one shape of income for the rest of your life.   Called lifetime annuities because they pay an income for the rest of your life no matter how long you might live.

The advantages of lifetime annuities are obvious, the guaranteed income they offer. The disadvantage is not so obvious, which is the fact that the income shape cannot change if your requirements change. Retirees like the guaranteed income offered by a Lifetime Annuity, but perhaps they would prefer a plan that can be reviewed in the future as they expect their income needs to change.

There are plans that can do this today. As may retirees anticipate inheriting from elderly parents in the next few years and so they may not need quite as much income later on in retirement as they do now.  A plan more flexible than the lifetime annuity may be required, one that could be reviewed say every 3 years.

Who provides lifetime annuities?

Prudential and Aviva are among the largest as well as Legal & General and Aegon.

These plans are available today and to find out more call us or fill in our web form.

UK Annuity – What are the options at retirement?

Finally you think, I have reached retirement, but it is like starting work again for the very first time, you are the novice. First of all you have to fight your way through all the retirement papers you have been sent from your pension provider and what is a UK annuity? Many retirees are confused by the paperwork that arrives through the door from thier pension provider so they just sign the form and send it back.

What are these annuity forms telling you?

The forms that are sent to you set out your statement of benefits, first of all the amount of pension fund you have at the date the statement was produced (this can and does change) and the amount of annuity the provider is prepared to pay for your age and gender.

These benefit statements are prepared with a set criteria of options for the annuity, for example the provider has probably based them on a single life level annuity with no escalation in payment and perhaps a five year guarantee. Now that may suit the provider but does it suit you?

What annuity alternatives do I have?

First and foremost you do not have to buy your UK annuity from the pension provider. You have the right to shop around on the open market. Secondly you can buy the annuity shape that suits your requirements. There will be an additional form in your retirement pack for you to get an alternative annuity quote from your pension provider on the terms you require.

Visit our website for details of the options that you can choose from.

Annuity Rates – Should you delay annuity purchase?

There are many stories in the tabloids at the moment regarding delay of annuity purchase to get higher annuity rates if interest rates go up. The million dollar question is will annuity rates go up even if interest rates do rise?

As annuity rates have been falling recently and are probably the lowest they have been for decades. Do you understand what the cost of delay could be if you do not purchase an annuity immediately?

An example purely fictional for illustrative purposes:

Mr J a 65-year-old retiree, with a fund of £100,000, who deferred buying an annuity by one year, could have to wait 13 years to recoup the lost income. Even worse, if interest rates fall by 1% over the period, the income from the annuity purchased after deferment of one year could fall to £7,406, meaning it would take 184 years for the client to get their money back.

If you delay by one year, though you receive a bigger annual income you will still be £1400 out of pocket after 10 years. However, after 13 years you will start making money, and after 15 years your total income will be £1586 ahead.

No one can forecast what might happen to interest rates and as always if you can afford to wait in the hope that annuity rates increase then that would be a decision you would have to make.

We recommend you seek independent financial advice if you are unsure and an adviser can talk you through the options.

Guaranteed Annuity

When you purchase a guaranteed annuity you purchase a fixed guaranteed annuity rate which other than if you add an option of indexation or escalation the annuity rates will not change. This for many retirees is the safest option there is at retirement. This is why guaranteed annuities are called secure pensions.

The single biggest worry for retirees is not having sufficient income to meet their everyday needs and fund emergencies. That is why guaranteed annuities are very popular. The fact is though that only one third of people that purchase an annuity do so using the open market option. The two thirds that do not use the open market option could be missing out on significant income for the rest of their lives.

Higher Annuity Rates With Guaranteed Annuity

To get higher annuity rates on your guaranteed annuity you just need to use the open market option. By using an annuity broker you could get as much as 60% more income for serious health conditions. Even for mild lifestyle conditions such as being over weight can add 10 to 15% onto your annuity rate.

So to get the best annuity rates find a good annuity broker and use your right to the open market option.

Best Annuity And How To Get It

Getting the best annuity at retirement means shopping around and comparing providers. This could be very time consuming for an individual so use an independent annuity specialist. These specialists have research tools to make finding the best annuity easy.

Best Annuity means using the open market

No one provider can offer the best annuity for all circumstances and this is why it is so important to use the open market. There has recently been some clever marketing on television from companies like Aviva (formerly Norwich Union) giving claims about getting an extra 20% .

Depending on the options you choose within your annuity would depend which provider might come have the best annuity. This is why you should use an annuity specialist to do your research after you have decided which options you need.

Best Annuity – Do You Qualify For Enhanced Annuity Rates?

Another good reason to use an annuity broker is to make sure you check if you qualify for enhanced annuity rates. The best annuity with enhanced rates would obviously beat a standard annuity. Not all pension providers offer enhanced annuity rates and this is good reason to go to the open market. To qualify for enhanced rates you need not be seriously ill something as simple as smoking can qualify for enhanced annuity rates.

Simply to get the best annuity use a specialist annuity broker such as annuitysupermarket.

Saving for the Future

Making the right decision before your retirement years is a good preparation for your future.

Before reaching your retirement years, it is always best to make a good decision on how you can maximize your retirement benefit or your pension. You can opt to choose for pension annuities that can make your convert your pension to a higher amount.  There are different insurance companies nowadays that offer good annuities for people who are about to retire.

The idea of having a bigger amount of pension can be very advantageous especially during this stage of your lifetime. Sometimes the future seems uncertain that we cannot predict the things that may happen whether good or bad. In any way, having security for the future is the best thing to prepare for at this present time. By doing so, you do not need to worry about any event in the future. More often than not, some retirees experience some health problems where money is much needed. By receiving a good amount of pension every month, then all needs can be sustained without any problem. You do not need to borrow money from other people such as your relatives or friends. Make a good choice of annuity purchase and acquire pension annuities calculator from the net so you can choose which conversion suits you.

Planning Ahead Before Reaching Retirement Years

Your pension can be converted to a higher amount by making a good decision on your annuity purchase.

There are different ways to make your retirement pension higher in amount at the time you receive them. While some people receive their pension at a default price as given by insurance companies, other people are using their pension for annuity purchase in order to get it bigger. It is indeed wise to use your pension to buy annuities so that you can enjoy a larger amount for your pension.

The planning period for pension annuities take place before the retirement age. It is during that time that the individual must be able to choose the best annuity that can be benefited at the right retirement age. By using pension annuities calculator, you can plan ahead easily and make a good a decision on your annuity purchase. By checking on some trusted and reliable insurance companies on the net, you can scout for the best deal that will serve your future needs. It is always to be make the future secured so that when retirement days come, there will be nothing to worry about in terms of financial needs.  It is like multiplying your money without exerting any effort to achieve it. Decide on your annuity early before you retire while there are good conversion rates being offered today.