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Canada Life to implement postcode pricing
Canada Life has announced it plans to introduce postcode pricing across its range of annuity products, to join the likes of Prudential, Legal & General and Aviva.
The insurer will take into account a client's age, gender and residential postcode to calculate the cost of the annuity, adding that the difference in price between the cheapest and most expensive postcode areas will be around 7 per cent.
Canada Life said this system "better reflects life expectancy", which although works out for the less well off, but retirement income specialist Annuity Direct has warned healthier, five-a-day middle classes will lose out.
In a statement, Canada Life said: "As previously announced, Canada Life does intend to introduce postcode annuities to their range of retirement products. Canada Life will announce to the market as soon as these products are available for IFAs and their clients."
Bob Bullivant, chief executive of retirement income specialist Annuity Direct, said with postcode pricing, older people who diligently eat healthily to get their five a day, don't smoke, drink in moderation and get plenty of exercise, are penalised by the insurance giants.
He said: "The postcode annuity system does work in favour of those living in more deprived areas, but I am not so sure these are altruistic, Robin Hood type motives.
"It is clearly to the advantage of the big insurers to pay more via an annuity for a shorter period of time.
"With Canada Life's entry to the market we can almost certainly anticipate the vast majority of life firms discriminating by postcode in a similar way it is only a matter of time."
