Impaired life annuity

An annuity is almost a personal calculation of your own longevity. If there’s a history in your family of people not lasting long after they’ve retired, then go for the level rate annuity and see if you can ramp up your income with what’s charmingly known as an ‘impaired life annuity’

A determining factor on how much you’ll get from an annuity is your life expectancy, which means that the fewer years a life company expects you to live after retirement, the more money it will give you.

There are now available some improved annuity rates for regular smokers, so these may well be worth looking into to improve the income for the rest of your life, as the assumption is that your annuity will not be paid out for as long as for a non-smoker.

So, prior to retirement, should you take up smoking, bungee jumping and other life-threatening activities in order to get a better rate? Well, you have to have been a smoker for five years to see any difference. And companies won’t just take your word for it; you’ll be subject to a number of saliva tests, so honesty is the best policy.

The Tobacco Manufacturers Association has figures that show 20.7% of people over the age of 65 are regular smokers of cigarettes. A composite of morbidity statistics show that 6% of all people in the UK over 60 have being diagnosed as suffering from some form of diabetes; 3% have suffered from cancer; a further 3% are cerebro-vascular sufferers (that’s a stroke) and 13% have suffered from cardio-vascular problems. So, statistically at least, you could be eligible for impaired life annuity.

In fact, research indicates that 30% of all people purchasing an annuity could benefit from the enhancements provided by an impaired life annuity, but only 5% actually get good enough advice to enable to make an informed choice. The minimum uplift on your income will be 5%, so it’s worth being aware of it.

Surrey Financial Advice can help you get the best out of your pension fund. Remember, with Surrey Financial Advice, we offer an initial discussion without charge, where we will describe our services more fully and explain the payment options available to you. [Contact Us]

The information set out on this page is intended to provide a general appreciation of the topic and it is not advice. Guidance should be sought from a specialist who is qualified to advise in your specific circumstances.

For more information on any aspect of annuities please contact Surrey Financial Advice on 01483 211800 or email us at admin@surreyifa.co.uk  We will be happy to assist you.