Buying an Annuity at Retirement
/What is an Annuity?
An annuity, commonly known as a pension, provides you with security of income for life during your retirement. It is paid monthly into your bank account. It is purchased with some (or all) of the retirement savings you have built up throughout your working life.
An annuity can be an attractive option if:
· Your pension fund will be your main source of income in retirement
· Your main priority in retirement is a secure regular income rather than passing on your fund to your dependants
The amount of income you receive depends on the size of your pension fund and the annuity rates in force at the time you purchase your annuity.
What is an Enhanced Annuity?
An enhanced annuity is the same as a standard annuity, except that it takes into account your health status and lifestyle health risks in determining the level of regular income payable to you. With an enhanced annuity you may be entitled to a higher regular income than you would under a standard annuity.
Where medical conditions may go against you when applying for some life policies, with an Enhanced Annuity having an underlying medical condition may lead to you possibly getting a better deal or more favourable terms. Cancer, heart or neurological conditions, diabetes, stroke or some lifestyle factor such as smoking are just some examples. Life expectancy is also one of the main dictating considerations in calculating annuity rate risk and this unique annuity addresses that issue.
What sort of medical information will I need to provide?
In general, the more detailed the information you can give, the more likely it is that you will receive an offer of an enhancement.
Some of the details required are:
Your weight and height
Your smoking history (past and present)
Any medication you are on (it’s best to have the names and dosages ready)
Full history of any medical conditions or incidents in your past
I want to also provide a pension for my spouse/civil partner; how does that work?
The medical history for both you and your partner will be assessed and quoted based on your joint medical history. The annuity may be enhanced if either of you have a medical history, which means the extra income applies to both of you. If you both have a medical history, the enhancement will be respectively bigger. A doctor must be able to verify the information provided in respect of your dependant.
