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Enhanced annuities

Call us for a free chat on 0800 032 9301

Lines open: 8.30am to 6pm Monday to Friday

Increased pension income if you're in poor health or a smoker

If you’re a smoker, or in poor health, you may be able to benefit from an enhanced or impaired life annuity which pays a higher income based on a reduced life expectancy.

The increase of receiving an enhanced annuity could be as much as 25%. This 25% increase is based on an someone with a terminal illness. The increase you could receive may be higher or lower depending on your personal circumstances

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  • Higher income than a lifetime annuity and still guaranteed for life
  • Income can continue to be paid to a partner or spouse after you die
  • Lump sum death benefits available
  • Option to protect your income against inflation


  • If you die shortly after the plan starts you may not receive full value
  • No flexibility to vary income to suit your needs
  • You can't take money out (other than the income payable)
  • It's not possible to cash in an annuity

Enhanced annuities explained

Video transcript

This is Anne, she's 63 years old. Anne lives alone with her dog Charlie. She's a smoker and has been diagnosed with heart disease. Anne's got £45,000 saved for her pension and wants to make sure it'll last her for as long as she needs it to. She's decided not to take any tax free cash and instead use all of her savings to take out a guaranteed regular income for life, also known as an annuity. Anne discovered that because of her smoking and health issues, she could get higher payments. She's already drawing the state pension so by the time she stops working these two incomes should be enough to ensure the house keeps running for her and Charlie. That's Anne's story. If this is something you'd like to explore, talk to an adviser or get your online advice report today.

Who is an enhanced annuity suitable for?

When getting annuity quotes, annuity providers or advisers will ask you a number of questions related to your health, so it’s important to be honest to see if you are eligible for an enhanced annuity. For example:

  • Medical conditions - Conditions like high blood pressure or cholesterol could lead to an increase in the income you are offered.
  • Lifestyle - if you smoke or are overweight you could also qualify for a higher income than you would be paid from a lifetime annuity.

Things to consider about enhanced annuities


You can decide whether your annuity will pay a fixed income, alternatively you can select either;

  • A fixed percentage increase, for example 3% which would provide a consistent annual increase regardless of whether inflation is higher or lower, or
  • A variable increase linked annually to the Retail Price index.

Death benefits

If you take this option and pass away before we pay out the equivalent amount you've protected, we'll pay out the rest as lump sum when you die. If you die aged under 75, we'll pay out tax free.

If you're 75 or over when you die the returned amount will be taxed at the beneficiary's personal rate of income tax.

Find out more about value protection

Beneficiary's pension or joint annuity

A joint life annuity will pay you an income for the rest of your life. It will then pay an income to your spouse, civil partner or a beneficiary for the rest of their life after you die. Income paid to your spouse or partner can be reduced to half or two thirds of the payments you were receiving (assuming one person doesn’t need as much money as two to live).

Payment frequency

You can choose how often you want to receive your income and when the money goes into your bank account. Being paid ‘yearly in arrears’ will give you the highest income, and being paid ‘Yearly in advance’ will provide the lowest income.

Guarantee period

You can guarantee your annuity for a specific number of years which means we'll continue to pay the income even if you die before the specified period is up. Selecting a guarantee period will provide a slightly lower level of income, but it guarantees that your estate continues to receive an income until the end of the guarantee term.

Have a commitment free chat with a Pension Specialist

Call us on 0800 032 9301

TextDirect: First dial 18001

Lines open: 9am to 6pm Monday to Friday. We may record and/or monitor calls for training and audit purposes.

Start your conversation with a pension specialist today by telling us about:

  • Your current pension pots
  • Any contributions you're making
  • How much you've already saved