Impaired Annuities

Impaired health annuity rates explained

Many people worry that if they develop a serious illness before they retire, they will not be able to use an annuity to support them once they stop working. Fortunately, this could not be further than the truth.

When an annuity provider gives you a quote on your retirement annuity one of the key facts that they take into account is the chance that you will live a long life. The longer your estimated life expectancy, the smaller the regular annuity payment simply because the annuity provide expects to be paying you for longer.

Conversely, if your life is going to be shorter due to ill health, you are likely to qualify for an impaired health annuity rate, also known as an enhanced annuity rate, and you will receive a higher monthly annuity payment.

Some impaired health annuity rate providers will give you better rates if you have a serious medical condition than if you have a lifestyle factor that may affect your life expectancy. Smokers, and those who are obese, are therefore better to investigate enhanced annuity rates, as impaired health annuities may not be suitable.

Where can I get an impaired health annuity?

Not all pension providers will offer quotes for an impaired health annuity. Our annuity calculator will be able to discover which impaired health annuity options will be best for you.

Like all annuities, an impaired health annuity is taxable and the amount you get each year will depend on the original size of your pension fund, your gender, age and health, the type of impaired health annuity that you choose and the most favourable impaired health annuity rates you can get.

Remember under the Open Market Option (OMO) you can take out the first 25% of your pension fund as a lump sum and it is totally tax-free. The remainder of your pension pot will pay for your impaired health annuity.

Do I qualify for an impaired health annuity?

To be considered for an impaired health annuity you are likely to be asked to attend a thorough health check, or medical. The results will be forwarded to your chosen impaired health annuity provider and the resulting retirement income you receive will be based on information provided by the doctor doing the examination, your GP and possibly also your specialist consultant.

Some of the conditions that qualify for impaired health annuity rates are:

• Cardiovascular problems, including angina, a previous heart attack, coronary artery disease or stroke.
• Any type of cancerous condition or malignant tumour.
• Chronic diabetes, including type 1 and type 2.
• Breathing problems related to chronic asthma.
• Being very overweight or obese.
• Having hypertension (high blood pressure).
• If you have had a kidney transplant or other organ transplant.
• Liver problems.

What will I get from an impaired health annuity?

If an annuity provider agrees that you qualify for an impaired health annuity, your monthly retirement income could be around 60% higher than someone in good health. This will be reduced if you want some of your impaired health annuity to go to your partner or spouse after your death. At Annuity Supermarket, we will need to get detailed quotes on impaired health annuities and joint annuities in your case so that you can review all the options.

Impaired health annuities also depend on gender and age and annuity rates from different providers vary widely. It can take some time to choose the best impaired health annuity for your particular circumstances.