“Annuity rates are at their lowest levels ever”, “the annuity trap”,
“pension income on track for biggest fall in a decade”. The news doesn’t
make for happy reading for those who are approaching retirement. After you’ve
navigated the myriad of complex options and features on an annuity (which I’ve
talked about previously) it seems that you’ll end up with a paltry income after
all. That’s if you believe the headlines.
However, there is a way to boost
your income, in some cases, by up to 50% if you’re aware of it and you qualify.
Insurers refer to them as Enhanced or Impaired Life Annuities.
Insurers try to judge the life expectancy of every customer so as to give the
best rates and ensure that they don’t end up paying out more than they take in.
It sounds rather morbid, but any
illnesses or health conditions that you suffer from could boost the income an
insurer is willing to offer you as they perceive you as a lower risk to their
profit margins (in other words they don’t expect you to live as long!) Some
measures indicate that there are more than 1,500 medical conditions1
that could boost your income: from high cholesterol and blood pressure through
to strokes and heart attacks that you may have suffered.
An odd state of affairs with
human psychology sees us being very honest about our health when purchasing
insurance products - you don’t want to give them a reason not to pay out.
However, when buying an annuity people tend to downplay
their health issues. Yet this is exactly what you should not be doing.
Such things as whether your
partner smokes, you take regular medication or even if you snore too loudly can
result in an increase in your income. The Telegraph reported earlier this year
that sleep apnoea (which results in loud snoring) can add up to £800 a year on
to your retirement income!
So the most important thing to
remember when purchasing an annuity it to be honest about your health – it
could add thousands of pounds to your annual income in retirement.
There is a wealth of information about pensions and investments; speak to an independent fincancial adviser who can help you navigate the options and make the best choices for you.
1 Medical conditions covered by
Just Retirement as at October 2012.
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