Enhanced Life Annuities

If you're a smoker or overweight (or both), there isn't a lot of good news around.  However, the normal doom and gloom of negative health issues can actually help you to get a better income from an annuity.

We've mentioned annuities before on the Retirment Revenue site, but just as a quick reminder, basically an annuity is a contract sold by an insurance company which will provide regular payments to the holder after they retire.

There are several different types of annuity and obviously you need to discuss the options with an independent financial adviser, but the one that is interesting to those of us with potential health problems is the 'Enhanced Annuity'.   These were originally designed for smokers and have now been extended to people who are overweight or who might have spent most of their lives in a hazardous occupation such as mining.

Enhanced annuities pay out more income than a conventional annuity and it can make quite a substantial difference to your income. But, (you knew there'd be a "but" didn't you), insurance companies aren't famous for their generosity.  You get a better income for the same cost because the insurance companies know that, on average, it is going to have to make the income payments for a shorter period of time. 

Of course, you can't just claim to be overweight or a smoker.  The annuity provider is highly likely to ask for confirmation from your doctor to make sure that everything you have stated on your application form in relation to your health is correct.

Most of the bigger insurance companies have an enhanced annuity product including Aviva, AXA, Legal and General, Prudential and so on, but they will only accept business from an IFA, so don't bother to approach them direct.  You can however, get an indicative quote online.  The insurance companies that offer enhanced annuities have established a common annuity quotation form that you can fill in.  The form and more information is available from: http://www.commonquotation.co.uk/

There is also a very useful general annuity comparison table available from a government sponsored site available here: