Stalwart Assurance's special annuity rates for smokers show the effect of smoking on life expectancy. Paradoxically, though, this is one case where smokers actually get a better deal.

When you buy an annuity, the insurer agrees to trade the lump sum from your pension for a flow of income which will last the rest of your life. The longer you are expected to live, the thinner the available cash must be spread, and the lower the annual income will be.

Stalwart has realised that this means it can give smokers higher annual payouts than non-smokers. A smoker of 65 can expect to die three or four years sooner than a non-smoker the same age. A lump sum of pounds 50,000 would buy a Stalwart annuity of pounds 5,269 for a male smoker aged 65, against just pounds 4,649 for the equivalent non-smoker.

The company offers similar enhanced rates to people who are grossly overweight, or suffer from conditions such as high blood pressure. In these cases, the applicant's overall health is assessed on a points system.

Cathy Horsley, Stalwart's marketing manager, says: "To qualify just for being overweight, you'd have to be something like 25 per cent above the average for your height. But what might happen is that you're quite overweight, and have high blood pressure, and the two together would qualify you."