Enhanced annuities are fast becoming the popular choice for those receiving professional advice.
But those who are shunning advice could well be missing out on maximising their retirement income, MGM Advantage is warning.
Enhanced products offer people with lifestyle or medial conditions a higher income from their annuity when compared to conventional products as these factors are considered as part of the application.
Conditions include high blood pressure, diabetes, heart problems and breast cancer.
In fact, it is estimated that more than 60% of people aged 55 and over could qualify for an enhanced annuity and, therefore, a higher income in retirement.
And where people are seeking independent advice, enhanced annuities are proving increasingly popular.
According to the latest ABI data, where a customer has received advice before purchase, 40.6% of annuity sales by premium were for enhanced annuities, compared to 41.7% for conventional annuities.
The trend over time has shown the market for enhanced annuities grew from just over 10% in 2004 to over 40% in 2011, as more providers came to market, offering choice to advisers and their customers and better rates for those people who suffer from medical or lifestyle conditions.
In the non-advised market, the difference is stark; only 2.2% of sales by premium went to enhanced annuities, versus 83.3% for conventional.
"If anything could demonstrate the value of financial advice, this data does. Enhanced annuity sales by premium are now equivalent to conventional annuity sales, but only where a customer has received advice," said Andrew Tully, pensions technical director at MGM Advantage.
"Given that up to 70% of people could benefit from a higher income because of their health it seems clear that the market isn't currently helping consumers as much as it should.
"When you look at the differences between enhanced and conventional rates, you can see why as an industry we need to work hard to ensure people shop around for not only the best rate but also the most appropriate product."
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.