Breast cancer survivors may qualify for a higher income in retirement by declaring their full illness history when purchasing a guaranteed life annuity. The latest inhouse research by retirement income specialist Just shows that of Just’s medically underwritten cases, approximately 30% qualified for an uplift of at least 5%.
Unlike living annuities, which pay out a portion of a retiree’s savings each year and offer no income guarantees, an enhanced (underwritten) life annuity guarantees retirement income for life. In addition, the pre-determined monthly amount can never decrease. It will either remain the same, or increase year-on-year, depending on the type of life annuity purchased. An enhanced annuity can pay a higher starting income based on certain health, socio-economic and lifestyle factors, including a chronic illness such as breast cancer.
Affecting 1 in 27 women nationally, breast cancer is the most common cancer for women across South Africa. Globally, the risk of incidence increases with age, with 80% of breast cancers occurring in women over 50. While the 10-year survival rate for early-detection sits equally high at 83%, Just Longevity Actuary, Bjorn Ladewig, says that the financial implications of surviving breast cancer are often underestimated.
Apart from the financial pressures due to the current economic climate, cancer survivors’ financial stress could be exacerbated by not having enough capital to cover living expenses, let alone the unforeseen medical bills throughout their recovery years.
“Financial worries should be the last thing on the mind of a retiree diagnosed with breast cancer,” says Ladewig. “It’s already difficult to live within your means at retirement and even more so if you have medical expenses. It is therefore beneficial that retirees purchasing an annuity income at retirement are medically underwritten at the beginning of the process to see if they qualify for a higher monthly income.”
How much more could a retiree diagnosed with breast cancer qualify for?
In an existing Just breast cancer case study, a woman aged 63 qualified for a monthly ‘uplift’ in income of 14% as a result of being medically underwritten. She received a diagnosis of advanced breast cancer in 2017 and although it is currently under control, she remains at high risk of it spreading to other parts of her body due to its advanced status. At retirement, she approached Just with a purchase sum of around R 880 000 and requested a quote for a lifetime income. She also requested a 10-year minimum payment period, which would mean that in the case of an unexpected early death, income would continue to be paid to her nominated beneficiaries, in either a lump sum form or as ongoing monthly payments for 10 years.
To calculate her starting income, an underwriter conducted a short telephone call to obtain her medical declaration, without requiring a physical medical examination. Many factors contribute to the high uplift reflected in her quote. These include the combination of her advanced diagnosis, smoking and socio-economic factors.