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You probably know that shopping around when you buy an Annuity will mean you get a better rate. Unfortunately far from everyone does shop around, condemning many pensioners to a lower income for the rest of their life.

But just how much difference does shopping around make? And how can your health and lifestyle affect your Annuity rate? Is it worth the time and effort and does the fee payable to an adviser still make it worthwhile?

We think it does and if you read on we’ll explain why.

Take a typical example based on a man aged 65, with a spouse aged 62, and a £75,000 fund after tax free cash. He wants to buy a joint life Annuity with a 50% spouse’s pension, a five year guarantee, and have income remain level but payable monthly in advance.

Just look at the difference between the best and the worst provider:

Best Provider £4,210 per year
Worst Provider £3,768 per year

Source: iress 23nd January 2014

The benefit of shopping around is clear, an extra £442 each and every year, for the rest of your life.

How can your health affect your Annuity rate?

The benefits of shopping around don’t end there.

If either you or your spouse suffer from ill health, the Annuity rate could get even better, if you qualify for an Enhanced Annuity. Some examples of how the level of income may increase, assuming all other details stay the same:

Male is a non-smoker with high blood pressure and high cholesterol, wife has no medical conditions £4,427 £127 extra per year
Male, no medical conditions, wife suffered from cancer, diagnosed a year ago £4,519 £309 extra per year
Male, non-smoker who suffered a heart attack a year ago, wife has no medical conditions £4,779 £569 extra per year
Examples two and three combined £5,336 £1,126 extra per year

Source: iress 23rd January 2014

Can other ‘lifestyle factors’ affect the Annuity rate?

Yes, if you are a smoker, drink more than the recommended weekly amount or are perhaps over weight you may well also qualify for an Enhanced Annuity. As this example of two smokers shows:

Both male and female smoke 20 cigarettes per day for a qualifying period, no other medical complaints £4,827

Individual underwriting

It is vital that your adviser looks in detail at your medical history, to ensure that you have the best possible chance of qualifying for an Enhanced Annuity:

  • Even relatively minor illnesses or lifestyle issues can help you qualify for an Enhanced Annuity
  • Getting accurate readings from your GP for conditions such as high blood pressure can help to improve your Annuity income
  • Your employment history can also help you qualify
  • As can factors you probably would never think of considering such as family history, the age when you parents died and even your spouse being under weight

What sort of illnesses will mean you qualify for an Enhanced Annuity?

Each Annuity provider has different criteria on what will and won’t allow you to qualify for an Enhanced Annuity.

For example LV= may offer enhanced terms on over 1,400 illnesses, whereas Friends Life may offer an Enhanced Annuity rate to ex-smokers, something not considered enough to qualify by other Annuity providers.

As a guide though, if you have one or more of the following illnesses you should qualify for a higher Annuity income:

Alzheimer’s disease
Aortic aneurism
Atrial fibrillation
Chronic congestive
Deep vein thrombosis
Heart attack
Heart block
High blood pressure
High cholesterol
HIV infection
Kidney failure
Liver failure
Lung disease
Motor neurone disease
Multiple sclerosis
Myalgic encephalomyelitis (ME)
Chronic fatigue syndrome (CFS)
Parkinson’s disease
Peripheral vascular
Rheumatoid arthritis
Systemic lupus
Ulcerative colitis

How can we help?

Our team of Independent Financial Advisers are experienced in advising clients when they reach retirement and working with them to get the best possible Annuity rate.

If you are approaching retirement and would like advice on your options call one of our IFAs today on 0115 933 84330115 933 8433, alternatively enquire online or email

Whatever route you pursue, take advice; the decisions you make will affect your income for the rest of your life.

The all-important small print

Whilst the Annuity amounts used in this article are actual they are only used to illustrate the potential enhanced Annuity rates available and do not constitute advice.