Choosing the right annuity option that covers the needs for both, yourself and your dependents is an incredibly important decision and one that should not be taken lightly. An annuity is the main way of converting your pension savings into a reliable income for the remainder of your life – and this is an income that you will be relying upon to provide you with everything that you need until your day of death, so it’s crucial that you have enough money to sustain your lifestyle.
One of the main contributors towards an annuity income is the average life expectancy of the applicant. But if you are currently suffering from poor health or you have been suffering from a long term medical illness then you are considered of having a lower projected life expectancy and therefore could be eligible for a higher annuity income, as this would be paid out over a shorter period of time.
What is an Enhanced Annuity and where might I be eligible for it?
An Enhanced Annuity is an annuity that is made available to anyone who might be considered of having a shorter life expectancy due to on-going health issues or perhaps a terminal illness. Anyone who can prove that they have been suffering from a long term illness, or that they have led poor lifestyle habits (heavy drinking, smoking etc…) which may have led to this long term illness, can apply for an enhanced annuity.
How does this work with a partner annuity?
Many couples choose to take out a joint-life annuity but are often concerned that this will bring down their annuity income, especially if one partner is in significantly better health than the other. The truth here is that even if you are a ‘fitness guru’ and look after yourself as much as possible, if your partner smokes, has poor lifestyle habits or has an on-going health issue you could still be eligible to make a compensation claim.
What types of Enhanced Annuity might be available to me?
- General Enhanced Annuities – these are general annuities available to anyone who has on-going health issues or poor lifestyle habits including obesity and smoking. If you find that you fall into any of these categories then you could look into applying for an enhanced annuity.
- Impaired-life Annuities–these annuities work in a very similar way to a general enhanced annuity, however they tend to be for more specific illnesses and health problems such as heart and pulmonary related illnesses.
Do all providers offer me this option?
If you are considering looking into an enhanced annuity then you may find that not all annuity providers will be able to offer you this type of annuity. You may therefore need to shop around a little to find exactly what you are looking for. There is nothing wrong with looking at a range of annuity providers before you make your final decision before purchase. After all, it is important to remember that enhanced annuities can pay you a great deal of extra annuity income and therefore are definitely worth the long consideration.
This article contributed by Paul James and he is a journalist and part time blogger.