Your IndustrySep 13 2013

Identifying those that should seek enhancement

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Everyone should consider purchasing an enhanced annuity, according to Andrew Tully, pensions technical director of MGM Advantage.

“People don’t need to be seriously ill, what may be fairly minor medical issues may mean a higher income is available.

“MGM research suggests 70 per cent of retirees could qualify for an enhanced annuity, so people should always shop around for the best deal and always give the annuity providers full details of their circumstances.”

While a wide variety of medical conditions are eligible for inclusion, Mark Stopard, head of product development of Partnership, says some common lifestyle and medical conditions which are relevant include:

• ‘managed’ conditions such as high blood pressure, diabetes or high cholesterol;

• smoking 10 cigarettes a day or more for ten years. Pipe and roll-up smokers also qualify depending on usage;

• obesity, defined as having a BMI of more than 30;

• heavy drinking, that is to say regularly and consistently exceed the recommended daily limits; and

• heart attack, cancer or stroke.

Once it has been established that a lifetime annuity is the best retirement income solution for a client the objective becomes finding the best rate available.

When it comes to the best rate available, Stephen Lowe, group external affairs and customer insight director of Just Retirement, says this may well be from a specialist enhanced annuity provider.

“It is important clients understand the importance of full and honest disclosure of their health and lifestyle details in terms of generating potential extra income.

“Income drawdown clients who are setting up plans or at a review should seek enhanced annuity quotes in order to generate true critical yield figures for accurate comparison.

“Intermediaries should also be aware that for clients with medical conditions, the income available may be higher soon after the point of diagnosis before the success of any treatment is known.”