Impaired life annuity meaning

An impaired life annuity is a medically underwritten lifetime annuity paying a higher guaranteed income because the applicant’s health or lifestyle indicates reduced life expectancy. It is a market term, not defined in legislation or case law, and is used consistently across England and Wales, Scotland, Northern Ireland and Ireland in pensions and insurance practice. Typical qualifying conditions include high blood pressure, diabetes, coronary heart disease, chronic kidney disease, certain cancers, multiple sclerosis and chronic asthma or other long‑term respiratory disease. Smoking status, previous stroke, and high BMI can also be relevant. Providers assess evidence (health questionnaires, GP reports and, where required, medical tests) and price an enhanced annuity rate accordingly. In legal practice the concept is significant when advising on decumulation from defined contribution pensions, exercising the open market option, individual or bulk annuity purchase on scheme wind‑up, and structured settlements. Accurate disclosure and valid consent to obtain medical information are essential; misrepresentation may affect the contract and available remedies. Sales and advice are subject to applicable UK and Irish insurance and consumer‑protection rules. The expressions enhanced annuity, impaired‑life annuity and medically underwritten annuity are used interchangeably.