People are turning to enhanced annuities in greater numbers than ever before, with the products on course for a record year.
According to Towers Watson, sales of enhanced annuities, which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as weight, smoking and occupation, amounted to £1.26 billion in the first half of 2010.
The figure represents a 41% rise compared with the second quarter of last year.
Record sales of £582 million and £676 million were recorded in the first and second quarters of this year respectively.
Enhanced annuity sales are on course to easily beat last year's record of £1.78 billion.
Research suggests that consumer interest in taking out enhanced annuities – which were first introduced in 1995 and now make up over a third of all annuities sold in the UK – is set to continue.
"2010 looks set to be another record year for enhanced annuity sales, with every prospect of breaking the £2.5 billion threshold for the full year," said Andy Sanders, senior consultant at Towers Watson.
"This means more consumers are benefiting from higher pension incomes because their medical condition or lifestyle has been assessed and a lower than average expectation of life anticipated.
"The continued growth of the enhanced annuity market has a number of ramifications. For those lives that do not qualify for an enhancement, average expectations of life are longer and need to be reflected in lower levels of pension income offered.
"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."
Our annuity best buy tables reveal how the offerings from various annuity providers in the market compare, including names such as Saga and MGM Advantage.
We've also recently partnered up with Premier Retirement Services to provide you access to their online annuity planner service.
Choosing an annuity is likely to be one of the most important financial decisions you will ever make, so any time used researching the annuity market will most definitely be time well spent.
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If you can't find exactly what you're looking for there, we've also recently partnered up with Premier Retirement Services, giving you access to their online annuity planner service.
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.
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