Enhanced Annuities

ExBT_Bob

So, from what I read http://www.bbc.co.uk/news/business-17997352 it is possible to gain a greater annuity payout if you are suffering from a number of illnesses or smoke. Details in the link attached seems to imply that only in a few cases does the provider check with your Doctor.

The obvious question is that as a non-smoker, what's to stop me just filling in the medical declaration as a 20/day smoker? (aside from the moral argument!!)

sandsy

Insurers do random testing on those applying for smoker rates on annuities to see whether they really are smokers or not. A cotinine test quickly sorts the real smokers from the pretenders.

jamesd

Why buy an annuity? Why buy one now when rates are low instead of waiting until you're older? Do you have a spouse who you'd like to receive a 100% pension after you die without reducing the income you get before that? Have you even considered using income drawdown?

Nearly_Old

ExBT_Bob wrote: »

So, from what I read http://www.bbc.co.uk/news/business-17997352 it is possible to gain a greater annuity payout if you are suffering from a number of illnesses or smoke. Details in the link attached seems to imply that only in a few cases does the provider check with your Doctor.

The obvious question is that as a non-smoker, what's to stop me just filling in the medical declaration as a 20/day smoker? (aside from the moral argument!!)

My annuity provider (Just Retirement) required a doctor's report plus for the smoking a separate form signed by the doctor. The initial general form that I completed for the Opem Market Option gave consent for potential providers to obtain a doctor's report and at least 3 did so before submitting their quotes.

jamesd wrote Why buy an annuity? Why buy one now when rates are low instead of waiting until you're older? Do you have a spouse who you'd like to receive a 100% pension after you die without reducing the income you get before that? Have you even considered using income drawdown?

Yes this does need very careful consideration and it took me 3 months and many discussions with my IFA before the final decision was made. Originally I was in no doubt that I would use drawdown but in the end it came down to our retirement lifestyle. We have maintained an annual household budget for over 20 years and have lots of things planned so having a known income just means that we can get with life. It is a difficult as there are so many unknowns, and each individual case is different so IMHO there isn't any "right" or "wrong" way. I did consider postponing buyimg an annuity for 2 or 3 years but then assumed that amongst all the unknowns that the date of death (although unknown) is fixed. So postponing might work; i.e. better rates, potentially shorter term but in the meantime I'd have missed 2 or 3 years income - who knows?

As for inheritance our son takes the view that we have worked for it and should enjoy it and if there is anything left at the end then he sees it as a bonus.

jamesd

You wouldn't have missed two years of income, that comes from the drawdown pot when you're using income drawdown.

A good and sensible approach from your son.

Nearly_Old

jamesd wrote: »

You wouldn't have missed two years of income, that comes from the drawdown pot when you're using income drawdown. Potentially this was possible so we ran some models for different market returns over the period; looked at some worst cases where the value of the fund would have fallen over the period and others where the increase in the fund would have been greater than the drawdown income.

A good and sensible approach from your son. I think partly that he realised that the Bank of M&D has been quite generous over the years so he probably didn't want to push his luck

I do think that everyone needs to consider all aspects thoroughly before reaching a decision. Our IFA went through and discussed with us our planned retirement budget, pensions and other savings and investments and produced a very comprehensive report. He produced another report showing the potential pros and cons for both annuity and drawdown and it did take time to consider everything before deciding. If I had been an active investor for a number of years and was confident in switching funds, etc then it might have been a different decision.

dunstonh

The obvious question is that as a non-smoker, what's to stop me just filling in the medical declaration as a 20/day smoker? (aside from the moral argument!!)

They dont ask the doctor. They employ home visit medical agencies to come out and do the test on a random sample. I have seen several tests take place in the last year. It is fraud if you lie and annuities come under insurance. So, if caught, it would be a declarable event for car, household and other insurances.

bigfreddiel

ExBT_Bob wrote: »

The obvious question is that as a non-smoker, what's to stop me just filling in the medical declaration as a 20/day smoker? (aside from the moral argument!!)

well its fraud and it will earn you a nice little stretch inside - roof over your head, three meals a day, tv, pool table, ou, cell mates - probably better than an annuity - nice one :beer: