Enhanced annuity sales up 41%

by Gill Montia

Story link: Enhanced annuity sales up 41%

The value of enhanced annuity sales in the UK rose to £1.26 billion in the first half of 2010, an increase of 41% compared to the second half of 2009.

Enhanced annuities, also known as impaired life annuities, provide higher pension incomes because the purchaser will have been assessed as having a lower than average longevity, as a result of a medical condition or a negative lifestyle choice, such as smoking.

According to research by professional services firm, Towers Watson, enhanced annuity sales totalled £582 million and £676 million in the first and second quarters of 2010 respectively, and the firm is expecting another record-breaking year.

Sales currently represent over a third of all annuities sold in the open UK market (by premium volume) and Tower Watson consultant, Andy Sanders, says: “Providers, whether active in the enhanced annuity market or not, need to carefully assess the mortality assumptions in their pricing to reflect the expectations of life of the consumers seeking their products.”