Enhanced annuity and impaired life annuity sales fall but keep market share. Enhanced annuities or impaired life annuities were first introduced in the UK back in 1995 and have rapidly gained a pretty substantial market share of all annuities sold. These annuities include: enhanced rates for serious medical conditions; increased rates for smokers; and enhanced rates as a result of lifestyle factors such as being overweight or occupation. Interestingly, enhanced and impaired life annuity sales have recently fallen back a bit, but have maintained their overall market share.
Sales of enhanced annuities fell to £415.8 m in the third quarter of this year, a decline of 7% relative to the previous quarterly figure of around £447.7 m, according to research by leading consultants, Watson Wyatt. Andy Sanders, a senior consultant, said that whilst third quarter sales fell a little, enhanced annuities maintained their share of the annuity market relative to the second quarter of the year. Sales in the first nine months of this year were just over £1.3 bn, less than £150 million short of full-year figures for last year, which, based on current trends, means that this year, 2009, is on track to be yet another record twelve months for the enhanced annuity market.
According to Watson Wyatt, retirees interest in taking out an impaired life annuity or an enhanced annuity, which can provide much bigger retirement incomes, is likely to continue. Currently, they make up around a third of all annuities sold in the open market in the UK. Andy Sanders stated that the continuing success of the enhanced annuity market place means more retirees are benefiting from higher pensions incomes because their medical condition or lifestyle has been professionally assessed and a lower than average expectation of life anticipated, resulting in higher annuity rates.
