If you are looking to retire in the near future, you may be deciding which type of annuity to purchase. However, with payments at historically low levels you should investigate all avenues to try and increase the amount you receive. One way of receiving a higher income is through an ill-health annuity.
Ill-health annuities are not just for those people who are seriously ill. They can be claimed because of certain lifestyle choices or non-life-threatening illnesses. Many people don’t realise that declaring a medical condition on their application could lead to them receiving more money each month. In fact, MGM Assurance conducted a recent survey which found that 70% of people who might be eligible don’t apply for an ill-health annuity and end up losing out.
An ill-health annuity pays a higher retirement income because the insurance company believes that you will not live as long as a healthier person. Therefore they can afford to pay you a higher monthly amount as you would be getting it for a shorter period of time. The increased level of payment varies depending on the seriousness of the illness, but you could stand to gain up to 40% more than you would with an average annuity.
There are two types of ill-health annuity. Enhanced annuities apply to people with both mild and more serious medical conditions. Impaired-life annuities are for those with life-threatening illnesses and these pay out the highest amounts.
You can be eligible for an ill-health annuity simply because of the lifestyle choices you’ve made. If you’ve been a heavy smoker for a number of years, are obese or regularly drink more than the recommended alcohol limits, then you should declare these factors when taking out an annuity.
There are many medical conditions that can make you eligible for some type of ill-health annuity. These range from diabetes and high cholesterol to cancer, strokes and heart attacks. If you think that you might be able to claim a higher rate, you should speak with an independent pension adviser before taking out a product.
The type of annuity that you purchase with your pension fund is extremely important. It’s not a decision that can be changed if you later find a better alternative. Therefore it’s important that you make the right choice first time. The pension market can be extremely complex if you don’t understand it. If you’re looking into which type of annuity to buy, you should seek independent advice before making a decision.
Use our simple calculator to see how much your income is likely to be.Try the calculator
You could qualify for an enhanced annuity if you have a medical condition or lifestyle that means your life expectancy might be shortened.See if you qualify
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