03 May 2024

Later life health problems can make enjoying your well-deserved retirement years harder than it should be. Those problems can hit your finances too, pushing up the cost of day-to-day living and creating new care and support costs.

That makes the guaranteed income a pension annuity offers a very attractive choice.

And if you’re facing health issues, you might find that your provider offers you an enhanced annuity with higher regular payments.

What is an enhanced annuity?

Usually with an insurance product, health conditions mean you’ll end up paying more or receiving less in return. With annuities, the worse your health, the more money you may receive. An enhanced annuity offers you higher regular payments because of your medical history or current state of health. It’s sometimes also known as an “impaired life annuity” or “enhanced pension annuity”.

You can see how that could work for you, by getting a quote from us. We’ll:

  • Take any relevant health or lifestyle details into account
  • Let you know if you can get a better rate elsewhere.

Which medical conditions do providers look at?

Many medical conditions can trigger enhanced pension annuity rates. They include: 

  • Diabetes
  • Asthma
  • Heart disease
  • High blood pressure
  • Cancer
  • Kidney failure
  • Smoking
  • Obesity

Every provider will have their own list. If you have a particular condition, we recommend shopping around to find the best enhanced annuity rate for you. How serious your condition is can also make a difference.

For example, based on our enhanced annuity rates in April 2024, you could see an income boost of over 30% more than a lifetime annuity, depending on your health condition. If you have suffered from multiple heart attacks you could get an extra 20% annuity income, and if you smoke around 20 cigarettes a day you could see a boost of 10%.


If I have an impaired life expectancy, what impact does it have?

Your provider will want to treat you as fairly as possible. So if you’re less likely to live for a long time, they’ll offer you a higher annuity rate. In total, you’ll still get roughly the same as someone who might live longer – just over a shorter period.

If your life expectancy is less than one year, you probably won’t be able to get an annuity. You’ll be able to take your pension pot tax free instead.

Do I need a medical examination?

That depends on your state of health and your provider. They may ask for an examination, or just a report from your doctor.

It’s very important that you give them accurate information – if you don’t, they might change or withdraw the annuity rate they offer you.

What should I do next?

We hope that’s helped you understand how enhanced annuities work.

Now we recommend shopping around to find the right product for you, whether that’s one of ours or someone else’s. Your pension provider might have an annuity of their own, though you don’t have to buy it. Other providers will offer different and possibly better products and rates.  

You can use our retirement income calculator to check your possible income, based on how much you have to spend. We can also put together a personalised annuity quote for you, which gives more details on what you’d get with us, and tells you if you could get a better rate elsewhere.

For more information about annuities visit Pension Wise, the free government guidance website from MoneyHelper. If you're looking for a financial adviser, the Unbiased website will help you find one. And we’d be very happy to answer your questions ourselves – just call us on 0800 048 2446 or visit our pension annuity page for a personalised quote.

Lines open Monday to Friday 9am to 5pm. We may record and monitor calls.

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