Enhanced annuities explained

What is an enhanced annuity?

Usually with an insurance product, health conditions mean you’ll end up paying more or receiving less in return. With annuities, the worse your health, the more money you may receive. An enhanced annuity offers you higher regular payments because of your medical history or current state of health. It’s sometimes also known as an “impaired life annuity” or “enhanced pension annuity”.

You can see how that could work for you, by getting a quote from us. We’ll:

• Take any relevant health or lifestyle details into account
• Let you know if you can get a better rate elsewhere.

How do you qualify for an enhanced annuity?

You may find a provider that offers you an enhanced annuity if you’re dealing with certain health or lifestyle issues. As part of the annuity quote journey, you'll be asked questions about your medical history and lifestyle factors such as whether you've been diagnosed with health conditions or if you smoke. They’ll use that to see if they can offer you one.

That’s why it’s very important to be as clear and open as possible about your general health and lifestyle. You should also make sure that you share full details of any medication you’re taking or treatments you’re undergoing.

Which medical conditions do providers look at?

Many medical conditions can trigger enhanced pension annuity rates. They include: 

• Diabetes
• Asthma
• Heart disease
• High blood pressure
• Cancer
• Kidney failure
• Smoking
• Obesity

Every provider will have their own list.

We break our own list down into several categories: heart conditions, cancers and other malignancies, lung diseases, stroke, diabetes and neurological diseases. We also ask about your blood pressure and cholesterol levels, if you smoke and how much you drink, and your general state of health and medical history.

If you have a particular condition, we recommend shopping around to find the best enhanced annuity rate for you. How serious your condition is can also make a difference.

For example, based on our enhanced annuity rates in December 2024, you could see an income boost of over 30% more than a lifetime annuity, depending on your health condition. If you have suffered from multiple heart attacks you could get an extra 19% annuity income, and if you're a smoker who smokes 20 packets of cigarettes per day you could see a boost of 10%.

If you need to find out more about a particular health condition, we’d recommend visiting the NHS Health A to Z list.

If I have an impaired life expectancy, what impact does it have?

Your provider will want to treat you as fairly as possible. So if you’re less likely to live for a long time, they’ll offer you a higher annuity rate. In total, you’ll still get roughly the same as someone who might live longer – just over a shorter period.

If your life expectancy is less than one year, an annuity may not be your best option as you might be able to take all your pension as a tax-free lump sum.

Do I need a medical examination?

That depends on your state of health and your provider. They may ask for an examination, or just a report from your doctor.

It’s very important that you give them accurate information. If you don’t, your provider might change or withdraw the annuity rate they offer you or you might have to repay any overpayments made that were based on the information you originally provided.

What should I do next?

We hope that’s helped you understand how enhanced annuities work.

Now we recommend shopping around to find the right product for you, whether that’s one of ours or someone else’s. Your pension provider might have an annuity of their own, though you don’t have to buy it. Other providers will offer different and possibly better products and rates.  

You can use our retirement income calculator to check your possible income, based on how much you have to spend. We can also put together a personalised annuity quote for you, which gives more details on what you’d get with us, and tells you if you could get a better rate elsewhere.

For more information about annuities visit Pension Wise, the free government guidance website from MoneyHelper. If you're looking for a financial adviser, the Unbiased website will help you find one. And we’d be very happy to answer your questions ourselves – just call us on 0800 048 2446 or visit our pension annuity page for a personalised quote.

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