Can I get a higher income if I smoke or have a health problem?

14th February 2012

When it comes to annuity incomes, one of the pre-determining factors is your current state of health and your life expectancy. As an annuity income is designed to be paid out over the period of the annuitants life, it is given that an annuitant with a longer life expectancy will be paid a lower income as they are expected to be paid it for a longer period of time and vice versa.

When it comes to smoking and health, these poor lifestyle choices will generally stipulate that your life expectancy will be lower as you are more likely to develop serious illnesses or have heart problems further down track, as a result you may receive a higher annuity income.

What factors does my annuity income take into consideration?

When it comes to determining the annuity income for an individual or a couple there are a wide range of factors that need to be taken into consideration. An annuity is paid out for the rest of your life, so determining a realistic life expectancy can go a long way to determining a fair income amount. Some of the factors that are taken into consideration include:

  • Location – where you live can contribute to your life expectancy
  • Age – how old you are
  • Health – your current state of health and if you suffer from any recurring or long term health issues
  • Lifestyle habits – if you lead any poor lifestyle habits including smoking or excessive drinking.

What if I smoke but my partner doesn’t?

When it comes to taking your partner into account this is only the case if you are looking to take out a joint life annuity. In this situation both of your situations will be taken into account and a median will be found between the two. This could mean that in some situations you will be left with a lower annuity income than if you took out a single life annuity.

If you have poor health and bad lifestyle habits but your partner doesn’t, then their situation will be taken into account. As a joint life annuity is designed to be an income for the remainder of both partner’s lives, if your partner is believed to live longer then your income will be reduced, regardless of your personal situation.

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