If you are about to retire you are probably considering a retirement annuity to secure an income for life. You may have seen reports that retirement annuities have fallen in value in recent years. Impaired life annuities (also known as enhanced life annuities) are a way of taking pre-existing medical conditions into account. This can boost your retirement income significantly.

Key points:

  • Impaired life annuities can boost your retirement income
  • You need to prove a pre-existing condition
  • This pre-existing condition should be likely to reduce your life expectancy
  • Which typical conditions qualify?
  • Practical considerations
  • Claim your free retirement checklist

How retirement annuities work in practice

Retirement annuities exist to prove you with a guaranteed income for life. They are usually bought when you retire and convert your pension savings into income. Read our guide to retirement annuities.

If you are healthy you can select from various options and buy your income. The rates on these incomes have been falling in recent years due to:

  • Improvements in life expectancy due to medical advances
  • Lower interest rates
  • Influences in the economy such as quantative easing

Impaired life annuity – a way to boost your retirement income

If you have a pre-existing medical condition before you buy your retirement annuity you can use this to boost your retirement income. It works a bit like life assurance but in reverse. Imagine buying a life cover policy just after you have been diagnosed with a serious medical condition. The insurers would be right to refuse you cover since they would know that it is very likely to mean they would have to pay out on the policy.

In the case of a retirement annuity the reverse is true. The insurers can assess your medical condition. If they conclude that your condition is likely to reduce your life expectancy they can offer you a higher rate of income as a result. Our experience is that pre-existing conditions can boost the income paid through an impaired life annuity by up to 50%.

Typical conditions which qualify for an impaired life annuity

An impaired life annuity is assessed on serious medical conditions likely to shorten your life expectancy. Therefore, the insurers are likely to want to look into the following conditions. They consider over 1,500 different conditions.

  • Smoker status
  • Alcohol consumption
  • Height and weight
  • Cancer
  • Diabetes
  • Heart conditions
  • High cholesterol
  • High blood pressure (hypertension)
  • Multiple Sclerosis
  • Neurological issues
  • Respiratory complaints
  • Stroke

This is not a definitive list, but probably contains the bulk of the conditions covered.

It is important to remember that it is the severity of the condition which increases the impaired life annuity rate. Therefore, the shorter your life expectancy, the better the income rate.

Practical considerations of an impaired life annuity


Initially you will apply for impaired life annuity quotes alongside standard retirement annuities. You will need to give the insurance companies various details about your condition(s) such as:

  • When you were diagnosed
  • What treatment you have had
  • The medication you are taking, including dosage
  • The general effects on your lifestyle

The impaired life annuity provider will issue you with an indicative quotation. This is not guaranteed, and is confirmed once medical evidence has been assessed.


On application the impaired life annuity provider will contact your GP to ask for a report on your condition. They may also request that you attend a medical examination.

This is an important step in the process, and can take some time. However, it is important to go through this process since you could significantly increase your income. Once the impaired life annuity provider is satisfied that your condition is serious they will confirm the income rate they are prepared to pay. Once you have accepted this offer and the contract is complete, this income is guaranteed for life no matter what the future course of your medical condition.

What next?

If you are reading this you are probably considering a retirement annuity, and also probably have one of the conditions mentioned above. if so, an impaired life annuity should be a consideration for your retirement income options. Retirement income decisions are extremely important since they are usually permanent once taken. We offer advice on retirement annuities and impaired life annuities, so contact us if you’re interested in discussing your case with an expert, or read our retirement annuity case study. Don’t forget that retirement annuities are not the only way to provide an income in retirement.

What to do if you are retiring soon

Check out the information below.

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About Dan Woodruff

About Dan Woodruff

Certified Financial Planner & Chartered Wealth Manager at Woodruff Financial Planning

Financial Planning helps you to navigate and anticipate significant life changes. I want to help you to ensure your money is managed wisely to give you the financial security that will fund the future and lifestyle that is important to you.