Norwich Union launches an impaired life annuity option today, to complement its range of products in the over 50s market.
Norwich Union launches an impaired life annuity option today, to complement its range of products in the over 50s market.
Available to customers aged 50 or more, this new option will provide an enhanced level of income for those people whose illness means that their life expectancy is significantly reduced.
Individuals (or their spouse/dependant if this type of annuity is applied for) who suffer from a serious illness or condition could qualify for enhanced terms from Norwich Union where this has had a measurable effect on expectation of life, including:
- Cancer
- Stroke
- Heart attack
These are the main illnesses, but there are others, such as diabetes if it is not controlled.
Norwich Union research shows that customers could potentially more than double their annual income through an impaired life annuity, however, some increases could be less than five per cent. The enhancement will be dependent on the degree of shortening in life expectancy and the benefit chosen.
Norwich Union's own experience shows that a healthy 60 year old male would currently be expected to survive for more than 20 years and has a 10 per cent chance of surviving over 30 years.
For a 60 year old male who has half this life expectancy (that is, he is expected to survive 10 years, with a 10 per cent chance of surviving over 15 years), then an enhanced annuity could give an income considerably higher:
Standard income £ 3,423
Impaired Income £ 5,535
Male, age 60, 5 year guarantee period, £50,000 premium, payable monthly in arrears. Source: Norwich Union 10/06/2002
The key features of Norwich Union's impaired life annuity option available on its conventional annuity contracts are:
| FEATURE | NU TERMS |
| Minimum Purchase Price | £50,000 (after tax free cash taken) |
| Minimum Age | None if retirement due to ill health, otherwise 50 |
| Maximum Age | 75 |
| 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 of offering set enhanced rates once minimum criteria have been satisfied).
On a joint life case, Norwich Union will still consider improved terms even if it is only the partner who suffers an impairment.
The impaired life annuity market is currently estimated to be around 5% of the total annuity market. However, approximately 10 per cent of policyholders purchasing a pension annuity suffer from an 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 of impaired life annuities, things are changing and this market is growing.
The Financial Services Authority has been keen to ensure that people approaching retirement maximise their choices.
Commenting, Willie Mowatt, head of retirement & protection at Norwich Union, said:
"In the current environment of low interest rates and lower annuity rates, customers are more focused than ever on enhancing their retirement income where they are in poor health. Norwich Union is launching its own impaired life annuity option now to meet that increased demand.
"This product should appeal to those people who suffer from poor health, and who want their annuity from a insurer that has financial strength behind it and has a strong track record delivering value for money annuities to their customers."
-Ends-
Notes for Editors
- For further details customers should telephone Norwich Union on 0845 3000697.
- Norwich Union is one of the leading providers of annuities in the UK, with a 16% share through the IFA channel.
- Norwich Union offer a comprehensive range of market-leading products 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 Annuity Provider by Moneyfacts.
- The best time to buy a pension annuity will depend on customers' individual circumstances.
- We strongly recommend that customers seek professional financial advice when deciding on the best time to buy their pension annuity.
Norwich Union is the UK's largest insurer. It is the UK's largest provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 75% of the company's long-term savings business.
Norwich Union can only advise on its own products.
- Norwich Union's news releases are available on the Internet at www.cgnu-group.com
- A selection of images is available from the CGNU Newscast site at 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 |