Enhanced annuities

What is an enhanced annuity?

With some financial products - travel insurance, for example - you get penalised for having health issues in the form of higher prices.

But with annuities, a medical condition can work in your favour by substantially boosting the income you receive. 

Enhanced annuities work on the basis that, if you have a medical condition, you'll have a shorter life expectancy than someone in a better state of health.

This means annuity companies are prepared pay you more each year on the assumption that they will be making payments over a shorter period.

Who qualifies for an enhanced annuity?

Common conditions that can make you eligible for an enhanced annuity include:

• asthma
• diabetes
• high blood pressure
• heart disease
• cancer
• kidney failure

Your lifestyle is also a factor - for example, if you're a smoker or heavy drinker. 

Find out more about the factors that influence the annuity rate you're offered in our guide to annuity rates.

How much will I get with an enhanced annuity?

Not all annuity providers offer enhanced annuities, so make sure you shop around. You can use the Money Helper annuity calculator to compare how much income you'd get from different providers.

It's important you fully disclose health and lifestyle details to be sure of getting the best rates you're eligible for.

When we ran quotes in April 2024 for a 65-year-old with an initial pot of £100,000 looking for a single-life annuity (with no protection or index-linking), we were quoted incomes of between 7% (Scottish Widows) and 15% (Standard Life) more for an enhanced annuity (based on an overweight smoker who is taking medication for high blood pressure and high cholesterol), compared with a standard annuity. 

The uplift you'll get depends on the seriousness of the condition. For example, having type 2 diabetes could boost your income by 30%.

How do I apply for an enhanced annuity?

Your life expectancy will be assessed based on your health and lifestyle, using a 'common quotation form'. This ascertains the seriousness of your conditions.

To get the best rates, it's worth speaking to a How to find a financial adviser. They will complete this form and send it to potential providers. You may have to provide supporting evidence from your doctor in cases of severe illness, but a medical examination is rarely required.

It may be possible to get an enhanced joint annuity, even if your partner is in good health.

Remember to be completely honest about the degree of your illness. And bear in mind that if your condition deteriorates after the purchase, the amount you receive won't increase.

Find out more about the steps you need to take to get the best income in retirement in our guide to buying an annuity.