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The 5 for Life currently offers a minimum 5 per cent guaranteed income for life from the age of 60.

However, the Secure Lifetime Income will provide appropriate age-related guaranteed income levels and a valuable income escalator feature.

According to Aegon UK, this will enable customers to benefit from market growth by locking in increases to the income levels, while at the same time protecting that income from the effects of market falls.

The product will replace the 5 For Life plan on 29 June, although there will be no change to the terms and conditions for those customers who have already purchased a 5 For Life plan.

David Healy, managing director of Aegon Scottish Equitable International, said: "Aegon pioneered the variable annuity concept in the UK and we have seen it grow in popularity since we launched 5 for Life in 2006.

"There is a substantial market in the UK of customers who require the security of a guaranteed minimum income for life, but also want the opportunity for that income to increase over time by participating in potential equity growth.

"Many of these people are also looking for a flexible product that allows them access to their capital. Variable annuities are the only product type in the market to offer all of this."

Aegon UK said that full details of the product would be released at the launch on 29 June.

Mr Healy said: "The Aegon Secure Lifetime Income plan aims to meet customer needs in the current market climate and will provide valuable guarantees at an appropriate and affordable cost."

Carl Melvin, certified and chartered financial planner for Glasgow-based Affluent Financial Planning Ltd, said: "It is not a great surprise, in light of the cost of such guarantees and Hartford's withdrawal from the market.

"Such plans are innovative and there is a place in the retirement market for third-way plans, but the big issue is the cost of such plans. They are expensive and have become more so in the current economic downturn.

"I, like many financial planners, consider such plans too expensive, so until the cost of third-way plans is made cheaper, they will remain a small part of the retirement market."

Stuart Bayliss, director of London-based Annuity Direct, said: "What Aegon UK is trying to do is make it clear that it is not going home, but it also accommodates the fact that providing these guarantees at the current time is quite expensive.

"Overall, the guarantee in the product is lower than the guarantees were in the old product, and as yet we certainly do not know whether there is a positive effect on charges and costs. I am hoping to get more information on that soon however."