According to MGM Advantage, in a study conducted by Research Plus with 2,086 UK adults aged 55+ (published in December 2011), 60% of people aged 55 and over have received medical treatment for conditions which would qualify them for an enhanced annuity, and yet 72% are unaware that certain lifestyle or medical conditions could qualify them for a better retirement income. In simple terms, reduced life expectancy can unlock the potential for greater yearly pension income.
It is suggested that only small numbers of older adults with diagnosed medical conditions are aware that they can increase their pension income. Despite as many as 70% of retirees potentially qualifying, ABI Market data for 2011 shows that while in the advised market, enhanced annuities accounted for nearly 41% of sales by premium, enhanced annuities accounted for only 2% in the non-advised market.
Over 60% of the over 55s surveyed admitted to some form of illness which could qualify them for a better income. In the MGM Retirement Nation report, findings showed medical conditions experienced by the over 55s which could qualify individuals for a better annuity rate through an enhanced quote, including:
- 40% of the over 55s have suffered or currently have high blood pressure;
- 33% of the over 55s have or have had high cholesterol;
- 12% require treatment for diabetes;
- Other qualifying medical conditions include: Heart disease – 8%; Chronic Obstructive Pulmonary Disease – 4%; Heart Attack – 4%; Breast cancer – 3%; Stroke – 2%; Prostate Cancer – 2%.
According to MGM, all of these conditions could qualify individuals for a better retirement income through an enhanced annuity, with as many as 70% of retirees potentially qualifying. Enhanced annuities factor in medical and lifestyle conditions when calculating the rate of income available and the difference between standard and enhanced rates can be significant.
This was illustrated in an example drawn from the MGM Advantage product portfolio – where a healthy man, aged 65, with a £100,000 pension fund could receive £6,106 a year income. If this man was a smoker with high blood pressure, the annual income would increase to £7,115. If the same man had diabetes with high blood pressure and high cholesterol, his annual income would increase to £7,843.