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Guide to Enhanced Annuities



    If a customer’s expected lifespan is five years shorter than a healthy life, an enhanced annuity will pay a higher income to take into account the fact the annuity is likely to be paid for a shorter period.

    Efforts to boost the ‘open market option’ in recent years have focused on statistics that show many people could qualify for an enhancement but are simply taking a conventional annuity with their existing provider. But how many people would be better off with an enhanced annuity?

    This guide will tackle who should purchase an enhanced annuity, explain the underwriting process and give an overview of how to demonstrate why you might recommend this product for your client.

    Supporting material is from Mark Stopard, head of product development of Partnership; Stephen Lowe, group external affairs and customer insight director of Just Retirement; and Andrew Tully, pensions technical director of MGM Advantage;

    In this guide


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. How much more does an enhanced annuity pay, on average, than a conventional annuity, according to Mr Tully?

    2. Approximately what value of enhanced annuities were sold in 2012, according to Mr Lowe?

    3. What does Mr Lowe say is the main drawback to all lifetime annuities?

    4. What percentage of people could qualify for an enhanced annuity, according to Mr Tully?

    5. Below which value are retirees able to take the entire value of multiple pots as a lump sum?

    6. Up to what percentage of annuity income are inbestment-linked enhanced annuities able to pay?

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