More than eight out of 10 (84 per cent) annuity holders likely to qualify for an enhanced annuity do not have one of these higher-paying products according to new research.
The figures, from Legal & General Retail, highlight the staggeringly number of people who are failing too maximise their retirement income — through a lack of knowledge or because providers are failing to signpost them to the most appropriate product.
Sales of annuities have risen in recent years, on the back of more generous annuity pricing due to higher interest rates. However, while an enhanced life annuity will pay a higher income for life, the Legal & General research found that 47 per cent of those surveyed did not know enhanced annuities existed.
Furthermore only 4 per cent of those who plan to get an annuity or are considering one to fund their future are considering an enhanced rate annuity.
Enhanced annuities are available to a range of people including those with a range of serious or more minor health conditions. This can include those who are on medication for a range of common health issues, such as higher cholesterol as well as those who may have higher BMI or unhealthy lifestyle, such as smoking.
Legal and General Home Finance CEO and managing director, retail retirement Lorna Shah says: “Despite annuities becoming increasingly popular, not enough people understand the nuances of how they work
“Annuities are based on average life expectancies – the longer you are expected to live, the more the provider expects to have to pay out, so the lower your rate.
“The flipside of this is, if you have health or lifestyle conditions which indicate your life expectancy might be below average then you may qualify for what is called an enhanced annuity, which has a higher rate.
“This uplift in rate for people who might face health problems later in life, could in fact be put towards care or support for those health needs.”
