When it comes to the time to think about retiring and beginning to plan a future after retirement one of your biggest worries will no doubt be how to make the money you have spent years saving last for as long as you will need it. This is a serious worry and it may simply be the case that your retirement pension will not be enough to get you through. With this troubling thought being more common and unfortunately more realistic, it is all the more important to know all the ways to make your money stretch as far as possible and an impaired life annuity can be helpful here.
An impaired life annuity is one of a number of different kinds of annuities that you can choose from. An annuity in general is calculated by the insurance company according to your life expectancy. The longer you are expected to live, the smaller your income will be. There are however exceptions to this. When you first look into annuities you may come across an annuity calculator, it will give you an idea of the annuity rate you can expect.
But it will ask you a number of questions to get to that answer; questions about your age, gender and general health. And this is the trick. More than a third of people are eligible for an impaired life annuity but do not even apply. If you are a smoker, if you are overweight, if you have a history of cancer or heart disease, if you are on prescription medication or have been hospitalised recently then you are in all likelihood eligible for an impaired life annuity.
Because the medical condition that you have will decrease your life expectancy, the regular income that you can expect to get will be greater. The actual income will depend on your current state of health and will need to be assessed, usually through a financial advisor independent of your annuity provider. It can be quite a lengthy process to apply for an enhanced life annuity, which is why most people shy away from it, but it could make a huge difference to your monthly income at a time when any small difference is very much needed. Do not miss out, make the effort and give yourself that little bit extra to get you through your retirement without all the financial hassles that usually come with it.
Many consumers approaching their retirement years, if not most of them, choose to at least look in to the possibility of investing in an annuity to help fund their lifestyle once they have stopped working. For those who do decide upon purchasing an annuity, there are several different options available. Not only are there a variety of different types of annuities but there are also several enhancements and add-ons that can be attached to certain annuities. For many consumers, the sheer number of options available can make choosing an annuity incredibly challenging. This is why each consumer should consult with an independent financial adviser. Many consumers are missing out on several enhancements available to them, including enhanced life annuities, because they do not have all of the information necessary to help them make educated decisions on how they will fund their retirement years.
Enhanced annuities allow consumers to receive higher levels of income if they have certain life threatening medical conditions. These enhanced annuities operate under the premise that the insurer can pay out higher levels of income to these consumers because it is assumed that the medical condition(s) in question will shorten the life expectancy of the consumer. This allows the consumer to pay out for a much shorter period of time.
There are several advantages to investing in an enhanced life annuities, the first of which is the higher payout. Depending on the medical or health condition, consumers can receive up to 40% more than they would with other annuity purchases. The enhanced life annuity is not subject to fluctuations based on the markets or other investment conditions. Consumers do not have to partake in any regular or ongoing medication conditions. Therefore, consumers do not have to worry about their income decreasing if their health condition improves. Knowing exactly how much money will be received and knowing that it is guaranteed and will never decrease allows the consumer to budget for their future. This budgeting can be for every day or every month expenses or it can be to anticipate a large life purchase or to pay down debt.
There are very few disadvantages to purchasing an enhanced life annuity. The first of these is that the consumer must explain their applicable medical and health conditions. Therefore, there is far more personal disclosure necessary to purchase an enhance life annuity than is the case for a standard annuity. The only other disadvantages associated with an enhanced life annuity are those that are associated with all annuities. These include that annuity payments may not keep up with the increased cost of living. It is also impossible for a consumer to vary their income payments once they have already agreed upon the annuity logistics. For any consumer who has a very short life expectancy, it may be better for them to invest in another form of retirement investment such as enhanced equity release, income drawdown, phased drawdown, and phased retirement. This would better equip the consumer to maximize all of their death benefits while receiving the highest level of income possible for their unique situation.
No matter what the choice by the consumer, consulting with an independent financial adviser should be the first action taken when deciding how to invest in retirement. With so many options available, many consumers are ill-equipped to make the right decision for their personal situation. Secondly, they may not even know all of the options available to them. That accounts for why so many consumers are inadvertently bypassing the possibility of qualifying for an enhanced annuity.