Smokers and people in poor health can all negotiate higher income, for the brutal reason that their life expectancy is lower than for healthy people, so the annuity company calculates it won’t have to pay out for so long.
“Enhanced” or “impaired life” annuities are designed for people who smoke, are obese or have a serious medical condition. Insurers Canada Life, Just Retirement, LV, Norwich Union, Prudential, Scottish Widows and Partnership offer these, which can boost your income more than 15 per cent.
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Philip Brown, head of retirement and care product development at Partnership, says £1billion worth of enhanced annuities were sold last year, about one in 10 of the total, yet as many as four out of 10 people qualify.
He urges: “If you smoke, if you have been ill or even if you are slightly overweight it is worth checking out what is available.”
Current volatility is likely to last for some time but you can’t delay your decision for ever.
If interest rates fall further, you could regret not acting now.
Seek advice from an independent financial adviser and do some research online.
The Financial Services Authority website allows you to compare annuities at: www.fsa.gov.uk/tables.