Your IndustrySep 13 2013

Getting the best enhanced annuity for your client

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It is vital that you clearly explain to your client the need to be open about medical history and lifestyle factors, which Mark Stopard, head of product development of Partnership, warns is “completely counter intuitive to the way” most people typically run their finances.

He continues: “If they are taking out a joint annuity, you need to remind them that this person’s medical history can also have some bearing on the rate they receive.

“Rates vary more than they do for conventional annuities so it is important to complete the common quotation form and then approach the enhanced annuity providers either directly or via one of the various portals.”

There are a number of ways to access expert underwriting, ranging from online medical forms to medical underwriting over the telephone.

A good starting point, according to Stephen Lowe, group external affairs and customer insight director of Just Retirement, is the industry-standard common quotation form, which is available in electronic as well as paper format.

This form, which has been jointly developed by enhanced providers to enable intermediaries to gather and submit sufficient information to providers, allows direct comparisons of the income levels available from each one.

As with standard annuities, Mr Lowe says it is important to request quotes from a full range of enhanced providers because each has specialist areas in which they may be more competitive.

He cautions that clients should also “beware of taking shortcuts or trying to save time by using streamlined or shallow underwriting based on just a very few broad client questions”. This, he says, has been “shown to make it less likely for clients to qualify for enhanced rates and those who do qualify may not receive the same level of income”.

Advisers hould remember that enhanced annuities are an opportunity to demonstrate high levels of customer service because they require each client to be treated individually, Mr Lowe adds.

“Intermediaries must seek to understand their client’s circumstances and identify their objectives before making any recommendations.

“It is becoming more common, for example, for retirees to have several different pensions and sources of income that they can deploy over a number of years, perhaps staggering the purchase of annuities and mixing different solutions in order to find the right balance of income, flexibility and security.

“Once the need for a lifetime annuity has been established and options such as dependant’s pensions, guaranteed periods and escalation chosen, the main purchasing factor is the level of income being offered.”

When shopping around for the best possible enhanced annuity for your client, Andrew Tully, pensions technical director of MGM Advantage, says it makes sense to obtain the best possible healthy life income available in the market.

“Then it is easy to demonstrate that the income you have obtained for your client is higher than the highest healthy life income.”