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   Impaired life annuity
  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 annuities
of up to 20% extra for smokers and impaired rates of up to 100% extra to people suffering from a serious disease.
  Impaired enhancement   Annuity rates   Medical conditions
  General Practitioners Report      

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Impaired enhancement
Enhanced annuities apply 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 an immediate needs annuity can be considerd.

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.


Enhanced annuity

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.

Mortality and life expectancy is of course far from being an exact science and this is why the Anderton Mortality Tables can prove to be such a useful guide in this respect and a far more trustworthy barometer of expected mortality. The enhanced annuity takes into account the details within these tables to give a more reasonably considered result that is better for all concerned. This is a difficult subject to discuss and one that can be upsetting but it is a fact that you need the right facts and information to plan for the future, whatever the circumstances.


Annuity rates table - impaired
These rates tables are for impaired health annuitants. For other rates try;

standard single rates smoker single rates
standard joint rates smoker joint rates
diabetes annuity rates with profits annuity rates
purchased life rates immediate needs rates
 
   Impaired annuity rates - pensions
 
 

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
£10,659  
£4,877  
  Male age 65 - Impaired life rates
  Male age 65 - Standard rates
£10,681  
£5,425  
FEMALE, single, level rates
  Female age 60 - Impaired life rates
  Female age 60 - Standard rates
£10,659  
£4,877  
  Female age 65 - Impaired life rates
  Female age 65 - Standard rates
£10,681  
£5,425  
JOINT, level, 50% spouse rates
  Joint both aged 60 - Impaired life rates
  Joint both aged 60 - Standard rates
£5,986  
£4,631  
  Joint both aged 65 - Impaired life rates
  Joint both aged 65 - Standard rates
£6,404  
£5,070  
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.

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Annuity Rates
Single
  55 £4,933  
  60 £5,435  
  65 £6,093  
  70 £6,930  
Joint
  55 £4,666  
  60 £5,113  
  65 £5,612  
  70 £6,273  
£100,000 purchase, level and standard rates
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