Impaired life annuities continued to gain ground in the
Sales of these retirement-income products rose to 3.02 billion pounds in 2011, a 22% increase from 2010 and double that of 2008 levels, according to research by
Awareness by advisers and consumers "has steadily grown as a result of industry and media activity," said
The products, also called "enhanced" life annuities, were first introduced in the
The product, which is sold only to individuals, is an immediate annuity providing an income for life in exchange for someone's accumulated pension savings, said Sanders.
The annuity is "enhanced" relative to the income from a "standard" annuity, as medical conditions and lifestyle factors of the individual concerned are considered, with an indication that their life expectancy is shorter than the average annuitant, Sanders explained.
Sales were around 15% of the total annuities sold in 2011, he said.
"One of the most noticeable changes in the retirement market over the past few years has been the rise in the number of enhanced or impaired life annuities," said Bolton in an email response. "These are annuities which use medical underwriting to provide a higher than average income to people with conditions or lifestyles that are likely to reduce their life expectancy — such as obesity, asthma or diabetes.
Bolton said Aviva
"It needs to be explained clearly that providing adverse medical information will only ever improve the income on offer, never reduce it," he said.
The opportunity in 2012 for enhanced annuity providers "is to achieve greater penetration of the overall annuity market," Sanders said. In 2011, only around 15% of people purchasing an annuity "received enhanced terms," he said. "The range of medical conditions and lifestyle factors that can be considered suggest a higher percentage may be eligible."
"One of these choices will often be to take an enhanced annuity if the individual's lifestyle or health warrant it," he said.
As to regulatory challenges, the biggest in 2012 for all annuity providers relate to implementing gender-neutral rates, as required by a recent
Attempts to get comment from
According to information gleaned from websites,
Partnership Assurance was formed in
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|Source:||A.M. Best Company, Inc.|