Can I Get an Annuity if I Smoke?

I smoke around 15 cigarettes per day. I’ve been charged more for Life Insurance in the past because I’m a smoker, so now I’m about to retire I was wondering if I’ll be charged more for an annuity because I smoke?

Question asked by Ms D Morgan
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Smoker

Answered by Michael Englefield

Annuity Rates for Smokers

Actually, as a smoker you’ll be able to achieve a higher annuity rate than a non-smoker. This means you’ll receive a larger regular income from your pension savings than someone who doesn’t smoke but has a pension pot of exactly the same size.

Smokers qualify for what’s known as an ‘enhanced annuity‘, a retirement pension paid to someone who is in poor health or smokes.

Due to the life-limiting implications of smoking, the annuity company foresees having to pay an income for a reduced number of years and so increases the amount you receive accordingly.

A single man aged 65 living in the same postcode as Drewberry’s London office can expect to receive an annuity of £2,690.64 per month from a £50,000 pension pot. This assumes he doesn’t index his annuity so it keeps pace with inflation.

As a smoker, however, the same man could expect to receive another £125.40, or £2,816.04 per year.

If you’re currently suffering from a smoking related disease, such as chronic obstructive pulmonary disease (COPD) or heart disease, then your annuity rate could be further enhanced once these factors are taken into account. Any enhancement due to ill health would be on top of the enhanced annuity rate for smokers you receive.

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Enhanced annuities
 
Smokers' annuity rates
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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