Annuities

Time2Go_25

Would I be correct in thinking that if someone aged say 70 applied for an annuity with a guaranteed period of say 20 years, that would remove any benefit of asking for a health based enhanced one?
Many thanks

Linton

Time2Go_25 said:

Would I be correct in thinking that if someone aged say 70 applied for an annuity with a guaranteed period of say 20 years, that would remove any benefit of asking for a health based enhanced one?
Many thanks

I dont really understand the question.  If your ill health justifies the enhanced pension you would be mad not to get a quote for one.  There is no extra cost, just a higher monthly income,.

Perhaps you mean the other way round - if you can get a health enhanced pension is it worth paying for a longer guarantee period.  The answer is that the two options are different.  The enhanced pension is at no extra cost and gives you more, dependent on the nature of your ill health, whilst you are alive.  The extra guarantee period costs more and is for the benefit of your beneficiaries (eg a spouse).You would never see the benefit because you would be dead.

DRS1

I suppose the question is based around the concept that enhanced annuity rates essentially assume you are going to die sooner but if you include a feature which means the annuity will pay out for a specific term regardless then maybe the annuity rate won't be as good as the enhanced rate with no guarantee period.

OP I suggest you play around with the annuity calculator on Moneyhelper to see what the impact is so get three quotes standard annuity with 20 year guarantee, enhanced annuity with no guarantee and enhanced annuity with 20 year guarantee.  If 1 and 3 are the same then the answer to your question is YES but I suspect the order (highest rate to lowest rate) will be 2 then 3 then 1.

dunstonh

Would I be correct in thinking that if someone aged say 70 applied for an annuity with a guaranteed period of say 20 years, that would remove any benefit of asking for a health based enhanced one?

effectively yes.

On the quote system we use, it tells you the medical uplift in percentage terms.  The minute you start adding any guarantees, the rate of uplift starts to reduce, and by the time the guarantee takes you past 84-87, the uplift can disappear.

Time2Go_25

dunstonh said:

Would I be correct in thinking that if someone aged say 70 applied for an annuity with a guaranteed period of say 20 years, that would remove any benefit of asking for a health based enhanced one?

efffecitvely yes.

On the quote system we use, it tells you the medical uplift in percentage terms.  The minute you start adding any guarantees, the rate of uplift starts to reduce, and by the time the guarantee takes you past 84-87, the uplift can disappear.

Cheers that's what I assumed

MyRealNameToo

Time2Go_25 said:

Would I be correct in thinking that if someone aged say 70 applied for an annuity with a guaranteed period of say 20 years, that would remove any benefit of asking for a health based enhanced one?
Many thanks

The devil is in the detail and without knowing all the details cannot say with absolute certainty but I'd be willing to stake a decent sum on the answering being yes, by the time you've added the 20 years guarantee the uplift has been eroded

You won't be worse off for having asked or been awarded one but you are highly unlikely to be better off.