Tag Archives: Impaired Annuity

Save Thousands a Year by Using the Open Market Option!

Annuity, , , , , , , , , , , , , , , , , , , , , ,

The open market option is the right of the consumer to shop around before choosing an annuity. An annuity cannot be changed or cancelled once it has been bought – so it is immensely important to choose correctly the first time around! After all, an annuity can have an impact on your financial security for the rest of your life, and is therefore one of the most significant financial investments in life.

Research shows that a huge proportion of people are not aware of the open market option and that many people still continue to commit to the first offer made to them by their existing pension provider. This is not to say that the offer made by your pension provider will not be competitive. But according to some research, shopping around could help you get up to 20% more income than your existing provider, depending on which annuity and provider you choose, and an impaired or enhanced annuity could mean getting up to 46% more! Using the Open Market Option and shopping around for the best annuity scheme can therefore help you to save thousands of pounds over the year and a vastly significant amount of money over time.

There are many different types of annuities and choosing the most suitable annuity can seem a bit daunting. This is probably why some people simply choose to stick with their existing pension provider for an annuity. But thanks to all the information, resources and tools available today, understanding the annuity market and making an informed choice is not difficult at all.

There are many comparison and advice websites out there which can offer objective information about different types of annuities. You can learn about fixed annuity options, variable annuity options, as well as different bells and whistles that you can choose to add to an annuity. You can also use online tools like the pension calculator, to work out the maximum income you can get for your pension savings lump sum. These free tools and resources can really help you make the best of the open market option. Most insurance companies and annuity providers also offer lots of information on their websites, as well as offering free instant quotes based on your individual case.

Shopping around and using the open market option has never been easier or more convenient than it is today, thanks to the wealth of resources and information available. If you need more help and guidance when choosing, you can also consult an independent financial advisor. In fact, for certain types of annuities, such as investment linked or escalating annuities, it is essential to take independent advice from an expert. An IFA can help you understand your own needs, different products and how they work, and ultimately make a considered decision.

Different Types of Annuities

Annuity, , , , , , , , , , , , ,

There are a number of different kinds of annuities and in order to get the most out of your choice of product it is important that you know what kinds of annuities are available and how they can benefit you. Firstly, there are annuities which are called Capital Protected Annuities and help provide annuitants with peace of mind. With this kind of annuity if you pass away before you reach 75, the fund that you have built up will be given back to your estate, excluding of course the income that has previously been utilised and a tax of 35%.

There are also impaired and enhanced annuities. A normal annuity is calculated to accommodate a life expectancy that does not reach beyond the average, so if you have an illness or condition that would decrease your life expectancy you can apply for an enhanced annuity or an impaired annuity. About a third of people reaching retirement have the potential to get an enhanced or impaired annuity. These annuities will give you extra income, so it is an excellent thing to apply for. Typically those who are smokers, overweight or have a history of cancer or heart disease are likely to get annuities of this kind.

Annuities which are called investment linked are annuities which are linked to the stock market. With this kind of annuity you can get the basic benefits of an annuity plus the potential of stock market development and what this could mean for your income. However, due to its link with the stock market there is no guarantee that an investment linked annuity will increase your income or improve it in any way.

With-profits annuities level out your investment over a period of time, this means that when you take out an annuity like this you choose an ABR or Anticipated Bonus Rate. If your anticipated bonus rate is lower than the insurance company’s then your income rises, but the opposite is also true.

There are a number of other kinds of annuities all offering a varying balance between your investment and your returns. With each option there is a risk and a reward and it will be up to you to decide which option best suits your lifestyle and the life you want to keep living. Annuities are a gamble, but a much less risky gamble than other investments that are available, and with all the options to choose from you can tailor your annuity to benefit you.

Impaired Annuities Explained

Annuity, , , , , , , , , , , ,

Annuities have become increasingly popular and reliable in ensuring the financial security of individuals as they age and move in to their older phases of life. There are different annuities available and choosing the right annuity with the right provider can help to ensure a stable financial life during the years of retirement. With an economy that is often tumultuous and unpredictable, many individuals are seeking ways in which to ensure that their retirement years will be as free from financial worry as possible. For some, an impaired annuity offers the most lucrative and stable means to do so.

Eligibility Factors

Annuities are offered by insurance companies and are financial products used to help secure financial stability in the years ahead. They can be purchased in a couple of different ways, either through a payment system or in one larger lump sum. At a later date, the annuity is dispersed through monthly payments to the annuitant directly.

There are several advantages to annuities, perhaps the biggest of which is that the money in the account is eligible for tax-deferment until the funds are withdrawn.  This can be hugely impactful during retirement years in that most individuals make less money during retirement than during their working years, meaning that the tax break can be increasingly more beneficial after retirement.

Annuities are paid out on a monthly basis, most often until the death of the annuity’s owner.  To ensure the appropriate timing of the annuity payments, an insurance actuary will estimate the life span of the annuity’s owner to determine the most appropriate payout each month.  There are several different factors that are considered when the lifespan is predicted. One of these is the health condition of the annuity owner.

An impaired annuity becomes an option for those individuals who have a physical condition or health concern that can be expected to decrease their life expectancy.  For those with a qualifying condition, more money from the annuity can be received on a monthly basis, since the term of the annuity is expected to be shortened. The qualifying conditions for an impaired annuity can vary but there are several that are very commonly seen by insurers. These include diabetes, heart disease and high blood pressure.

In the United Kingdom, annuity accounts are typically converted from retirement pensions. In order to qualify for an impaired annuity in the UK the expectation is that the annuity owner will not live for more than four or five years. The conditions most often accepted under an impaired annuity in the UK include cancer, stroke, heart disease and major organ failure. In the UK, impaired annuities can also sometimes be offered to residents in nursing homes. They may even be purchased rather quickly to ensure payment is prompt.

Advantages of Impaired Annuities

To qualify for an impaired annuity, the individual must have their medical history reviewed and confirmed. However, the advantages to qualifying for an impaired annuity can be tremendous. For those individuals that qualify, there is no way to verify that the years lived will be shorter than those individuals who do not qualify for the impaired annuity. That means that for those who qualify for the impaired annuity, the financial advantage can be quite beneficial if they live past the amount of years predicted given their health condition(s).

Most insurance estimates predict that an individual can receive approximately 30% more money with an impaired annuity than they would with a standard annuity.

Annuities present a way to safeguard financial security during retirement years. However, for those individuals who qualify for an impaired annuity, the increased income during what may be the last years of life can prove to be even more beneficial.

For those who qualify, the benefits of an impaired annuity far outlast those of a standard annuity.

Health Condition Qualifications for Enhanced Annuity Plan?

Annuity, , , , , , , , , , , , , , , , ,

Choosing an annuity is one of the most significant and important decisions of one’s life, as once chosen an annuity cannot be cancelled or reversed. An annuity converts your pension savings into a regular guaranteed income for a fixed period of time, or for as long as you live. There are many different types of annuities, and several annuity providers. It is therefore important to shop around and use the open market option before making a commitment. An enhanced annuity plan is a type of annuity scheme, which can pay a considerably higher income to those who qualify.

Recent research shows that a high proportion of pensioners could be eligible for an enhanced annuity plan, but are simply not aware of this. Therefore, by signing on to an annuity plan that pays significantly lower income than they could receive with an impaired or enhanced annuity plan, many people lose out on thousands of pounds per year.

An annuity is one of the most important, and often the sole source of income during retirement. It is therefore vital to make sure that you are getting the best deal and optimising your pension savings through an annuity. There are simple ways to check if you could qualify for an Enhanced Annuity Plan, but first let’s understand what an enhanced annuity is.

An impaired or enhanced annuity plan is available to those who have a shorter than average life expectancy. Based on this, insurance companies can afford to pay more, since the expected term of the annuity is shorter than in a conventional case. Insurers use the applicant’s health condition and lifestyle habits to determine whether they are eligible for an impaired annuity.

Some common health conditions that qualify for an enhanced annuity plan are heart disease, diabetes, high blood pressure and obesity among others. Lifestyle habits include regular smoking. If you suffer from these or other health conditions or are a smoker, you may be eligible to receive a much higher income from your annuity than a conventional annuity.

An independent financial advisor can help you find out if you would qualify for an enhanced annuity. An IFA can also guide you through the pros and cons of each annuity type and help you make the right choice. You could also use a simple online tool available on many websites, to determine whether you qualify. Many annuity companies offer an enhanced annuity plan questionnaire or form to determine whether an applicant could potentially qualify for an enhanced annuity. The form generally consists of simple health and lifestyle related questions.