Do I qualify for an ill Health Annuity?

First it is worth explaining what an ill health annuity actually is. In short it’s basically another name for an enhanced annuity but the phrase ‘ill health’ normally relates specifically to impaired life annuities, which offer higher rates due to the annuitant suffering from serious illness. The kind of medical conditions which allow someone to qualify for an ill-health annuity include heart attacks, chronic asthma, diabetes, high blood pressure, kidney problems, strokes as well as many forms of cancer. Basically anything that is likely to substantially reduce your life expectancy compared to a healthy person. Ill health annuities are particularly lucrative for the person buying one as they can pay as much as 40% more in income compared to standard annuities. Not all providers offer ill health annuities so make sure you compare the market to see which company has the most competitive rates.

The reason why you will be offered as much as 40% more in retirement income is that the annuity provider will calculate that you are likely to die much sooner than someone who is healthy. They use actuaries to work life expectancy rates, based on an individual’s medical condition. If you die soon after you take out an annuity without any guarantee periods or joint life benefits then the insurance company will ‘make’ money on your pension fund.  If however you outlive their ‘prediction’ for your life expectancy then you will in effect have ‘made’ money on your fund.

You can add on other options to your impaired life annuity such as escalation, inflation linked as well as death benefits for your partner/spouse.