Find the highest impaired
annuity for your pension.
Impaired life annuity
"Receive significantly higher rates due to serious illness"
If you have suffered from a serious
illness higher annuity rates are offered where underwriters perceive there is a lower life expectancy. Compared to the standard rates, enhanced rates of up to 20% extra are given to smokers and impaired rates of 100% extra to people suffering from a serious disease.
Impaired enhancement
This applies to both a pension impaired health annuity and purchased
life annuity. In general, individuals that qualify for
impaired annuities have a significantly reduced life expectancy
(usually less than 5 years to live). It could be that a family
have an elderly relative now in a nursing home with a serious
illness and they want to protect the estate from the high
costs, in which case they can consider an immediate
needs annuity.
The leading causes of death in the UK are shown in the table
below and therefore anyone who has survived or currently suffering
from these conditions can be considered by underwriters for
impaired life annuities. These causes of death in the UK account
for 81.5% of all deaths for males and females that are over
the age of 50 and are as follows:
Major causes of death in the UK
Condition
Proportion
Heart Disease
37.0%
Cancer
24.0%
Stroke
12.0%
Major Organ Failure
(Lung, Kidney, Liver)
8.5%
When considering the income to pay an impaired life annuity the insurance
company should use a combination of mortality tables and underwriting guides developed from the mortality
experience of impaired lives.
When underwriting an impaired life annuity, some life companies may
use the normal mortality tables and enhance the rates by assuming
the annuitant is several years older than their current age,
such as aged 70 rather than 65, thereby offering a higher
income. However, this is not a satisfactory solution and some
companies use the Anderton Mortality Tables that base the
rates not only on the ageing process but also how the annuitant's
life expectancy is going to be affected by the impairment.
Annuity rates table - impaired
These rates tables are for impaired health annuitants. For
other rates try;
The following examples are for both male and female single
and joint lives, suffering from advanced lung cancer with
no spread. The purchase fund is £100,000 and assumes
a pension annuity payable in arrears, with 5 years guarantee,
no escalation no proportion and for joint a survivors
pension of 50%.
MALE, single, level rates
Male age 60 - Impaired life rates
Male age 60 - Standard rates
£15,028
£6,876
Male age 65 - Impaired life rates
Male age 65 - Standard rates
£15,050
£7,644
FEMALE, single, level rates
Female age 60 - Impaired life rates
Female age 60 - Standard rates
£15,009
£6,540
Female age 65 - Impaired life rates
Female age 65 - Standard rates
£15,090
£7,140
JOINT, level, 50% spouse rates
Joint both aged 60 - Impaired life rates
Joint both aged 60 - Standard rates
£8,345
£6,456
Joint both aged 65 - Impaired life rates
Joint both aged 65 - Standard rates
£8,853
£7,008
Annuity table - the annuity rate
shown above is based on a purchase price of £100,000
and should be used as a guide only. For annuities specific to your circumstances you should complete
the free
annuity quote.
The income from the impaired life annuity for a single male
or female would provide a gross income of about twice
that of standard pension annuity, payable for the whole of his life.
The joint annuity improves the rate by at least 25%.
At retirement the individual can use their pension fund to buy an annuity using an open market option to search for the highest pension annuity. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.
Impaired annuity rates - lump sum
Alternatively an impaired life could be used to buy a purchased
life annuity. For example, the family of an elderly mother
of 80 years suffering from dementia may want to supplement
her income. The family have realise a surplus of only £50,000
from the sale of a property and want to purchase an annuity
payable in arrears, with no guarantee, without
proportion or escalation and no dependents income.
Purchase life annuity
Annuity Type
Gross Income
Impaired life annuity
Standard highest annuity
£26,010
£10,210
Annuity table - the annuity rate
shown above is based on a purchase price of £50,000
and should be used as a guide only. For annuities specific to your circumstances you should complete
the free
annuity quote.
The income from a £50,000 annuity purchase for the
impaired life annuity would provide a gross income 2.5 times
greater than standard annuities, payable for the whole of
her life. The capital could be used for a purchased life annuity
or it could be used for an immediate
needs annuity if the elderly mother had to be admitted
to a nursing home to receive 24 hour care.
Medical conditions
An individual may have suffered from a number of medical conditions
in the past or at present that could mean he or she can qualify
for enhanced or impaired annuities. Some of the conditions
for enhanced rates are as follows:
Medical conditions for enhanced rates
Regular cigarette
smoker
Diabetes
Heart Attack
Chronic Asthma
Multiple Sclerosis
Stroke
High Blood Pressure
Cancer - lung, brest,
bowel, pancreatic, liver
High Cholesterol
Overweight
Digestive or Bowel
Complaint
Bladder or Liver
Complaint
Dementia
Emphysema
It may be necessary for the annuitant to have more than one
of the above conditions before an enhancement is offered.
The following table shows conditions required for the higher
individual impaired rates:
Medical conditions for impaired rates
Secondary malignant
cancers
Chronic heart disease
Some primary malignant
cancers
Kidney disease with
ongoing dialysis
Chronic Lung Disease
AIDS
Stroke with ongoing
support needed for normal daily living
Multiple Sclerosis,
permanent wheelchair support required
Motor Neurone Disease
Hodgkin's Disease
Parkinson's Disease
Alzheimer's Disease
This list is not exhaustive and when making an application
for enhanced or impaired annuities it is important
to state all medical conditions in order for the pension income
to reflect the expected reduction in the annuitants life expectancy.
General Practitioners Report
Where the annuitant suffers from ill health and is applying
for enhanced or impaired life pension annuities, it is common practice
for the insurance company to request a General Practitioners
Report (GPR). They do this to ensure that the details given
in the application form are correct before paying the annuitant
an income.
When people are younger and applying for life assurance the
underwriters could find reason in the GPR to load the premium
(increase) if they feel that your medical condition creates
a higher risk, and this works against the individual.
However, with enhanced
or impaired annuities the worse the medical conditions
the higher will be the income paid to an annuitant. Where
the individual is uncertain of the details of a medical
condition because it occurred a long time ago, a GPR can
clarify to the underwriters its severity.
