An annuity is a pension product that pays a retirement income – usually for life – using money from your pension pot.
Providers take into account your current health and medical history, or you being a regular smoker, and may offer an enhanced annuity rate by taking into account the effect on your life expectancy. In some instances, you can receive a significant increase in income. Your existing provider may not always consider these options, which is why it is essential to take professional financial advice when taking your pension benefits.
Qualifying conditions often include specified conditions including high blood pressure, cancer, stroke, heart conditions and diabetes. With some providers, a number of more minor conditions could qualify you for an enhanced annuity rate. You do not have to be severely ill to qualify for enhanced rates, and the potential to achieve enhanced rates should not be overlooked.
When you request an annuity quote, it is important that you disclose any medical problems, however minor, as this could secure you a much better income.
There are different types of annuities you can buy:
- single – only you get paid an income either for life or for a fixed number of years
- joint – payments continue to your spouse/partner after you die
- guaranteed period – you fix the number of years where payments to your spouse/partner continue after you die.
- escalating – increases every year to reduce the effect of inflation
- Capital Protection – is another way of ensuring your retirement income doesn’t stop when you die.