Article date: 24 June 2002
Norwich Union launches an impaired life annuity option today, tocomplement its range of products in the over 50s market.
Available to customers aged 50 or more, this new option willprovide an enhanced level of income for those people whose illnessmeans that their life expectancy is significantly reduced.
Individuals (or their spouse/dependant if this type of annuityis applied for) who suffer from a serious illness or conditioncould qualify for enhanced terms from Norwich Union where this hashad a measurable effect on expectation of life, including:
- Heart attack
These are the main illnesses, but there are others, such asdiabetes if it is not controlled.
Norwich Union research shows that customers could potentiallymore than double their annual income through an impaired lifeannuity, however, some increases could be less than five per cent.The enhancement will be dependent on the degree of shortening inlife expectancy and the benefit chosen.
Norwich Union's own experience shows that a healthy 60 year oldmale would currently be expected to survive for more than 20 yearsand has a 10 per cent chance of surviving over 30 years.
For a 60 year old male who has half this life expectancy (thatis, he is expected to survive 10 years, with a 10 per cent chanceof surviving over 15 years), then an enhanced annuity could give anincome considerably higher:
Standard income £ 3,423
Impaired Income £ 5,535
Male, age 60, 5 year guarantee period, £50,000 premium, payablemonthly in arrears. Source: Norwich Union 10/06/2002
The key features of Norwich Union's impaired life annuity optionavailable on its conventional annuity contracts are:
|Minimum Purchase Price||£50,000 (after tax free cash taken)|
|Minimum Age||None if retirement due to ill health,|
|Type of Pensions||Single life, single life with|
spouse/dependant(s) pension, longest life
|Pension Guarantee||5 or 10 years|
|Pension Escalation||Available (choice of options)|
Each application will be individually underwritten (instead ofoffering set enhanced rates once minimum criteria have beensatisfied).
On a joint life case, Norwich Union will still consider improvedterms even if it is only the partner who suffers an impairment.
The impaired life annuity market is currently estimated to bearound 5% of the total annuity market. However, approximately 10per cent of policyholders purchasing a pension annuity suffer froman impairment which significantly reduces their life expectancy.Therefore, the impaired life annuity market is under-utilised.
Whilst most consumers will have a relatively low knowledge ofimpaired life annuities, things are changing and this market isgrowing.
The Financial Services Authority has been keen to ensure thatpeople approaching retirement maximise their choices.
Commenting, Willie Mowatt, head of retirement & protectionat Norwich Union, said:
"In the current environment of low interest rates and lowerannuity rates, customers are more focused than ever on enhancingtheir retirement income where they are in poor health. NorwichUnion is launching its own impaired life annuity option now to meetthat increased demand.
"This product should appeal to those people who suffer from poorhealth, and who want their annuity from a insurer that hasfinancial strength behind it and has a strong track recorddelivering value for money annuities to their customers."
Notes for Editors
- For further details customers should telephone Norwich Unionon 0845 3000697.
- Norwich Union is one of the leading providers of annuities inthe UK, with a 16% share through the IFA channel.
- Norwich Union offer a comprehensive range of market-leadingproducts for the over 50s. Our aim is to provide the consumer with"The Life they deserve after work".
- In 2002 Norwich Union was named Most Competitive AnnuityProvider by Moneyfacts.
- The best time to buy a pension annuity will depend oncustomers' individual circumstances.
- We strongly recommend that customers seek professionalfinancial advice when deciding on the best time to buy theirpension annuity.
Norwich Union is the UK's largest insurer. It is the UK'slargest provider of life, pensions and investment products and oneof the leading IFA providers. IFAs provide around 75% of thecompany's long-term savings business.
Norwich Union can only advise on its own products.
- Norwich Union's news releases are available on the Internet atwww.cgnu-group.com
- A selection of images is available from the CGNU Newscast siteat www.newscast.co.uk
- An ISDN facility is available for studio quality interviews.Call the press office on 08703 66 68 73
For all life & pensions media enquiries 08703 66 68 73
For all other media enquiries 08703 66 68 68
Press office contacts:
|Office||Out of hours|
|James Evans, Norwich Union||08703 66 68 70||07790 487105|
|Ian Beggs, Norwich Union||08703 66 68 71||07790 487533|
|Louise Goffee, Norwich Union||08703 66 68 70||07810 057362|