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Can I Get an Annuity if I Smoke?

The value of pensions and the investment income they produce can fall as well as rise, meaning you could get back less than you invested. Tax treatment is dependent on individual circumstances and is subject to change.

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

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 Brighton office can expect to receive an annuity of £4,843.80 per year from a £100,000 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 £5,180.40 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.

I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.

Brendan Kelly
26/09/2019
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