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L&G research finds that consumers misunderstand how enhanced annuities work

L&G research finds that consumers misunderstand how enhanced annuities work

According to research from Legal & General, 76% of over 55s don’t understand the influence that medical conditions and lifestyle factors can have on their retirement income level. This could potentially mean that many are missing out on enhanced annuities.

A recent Money Observer article by Edmund Greaves reported that three quarters of over 55s wrongly think that declaring medical conditions will reduce the annuity rate they get. The confusion is understandable, as the underwriting aspect of annuities is the opposite of how most insurance products work.

“People with health conditions, as well as smokers and drinkers, stand to benefit from better annuity rates,” says Emma Byron, L&G Managing Director, Retail Retirement Income. “But only if they disclose everything to their financial adviser or annuity company.”

This research confirms what we often observe when talking to people enquiring about annuities. Our Annuity Specialists frequently report that callers initially don’t know why they would benefit from providing information about their health and lifestyle. It is explained to them that even moderately high cholesterol levels, smoking habits or alcohol consumption could qualify them for an enhanced annuity, as well as more serious medical conditions.

This table* demonstrates the effect that health and lifestyle can have on an annuity. It shows estimated increases in annual annuity income where the non-enhanced annuity income would have been £5,000:

Without a full review of an individual’s personal circumstances, including their medical and lifestyle conditions, they could miss out on the best enhanced annuity rate and income. Retirement Line is committed to helping IFAs and pension providers to ensure best outcomes for their clients through our thorough approach to underwriting.

Make sure your clients’ medical and lifestyle histories are understood

Enquirers to Retirement Line are asked the right detailed questions to ensure they receive the highest enhanced rates where applicable. Regular underwriting training enables our Annuity Specialists to secure an enhanced annuity for over 80% of our 2,000 monthly enquirers interested in a lifetime annuity. This compares to a national average estimated to be 60%.

Once the annuity purchase is complete, Retirement Line pays you an attractive share of commission as an Introducer Fee: please see our Annuity Introducer Fees page, call us on 0800 1444 777 or email


*Source: all enhanced quotes from Retirement Line's portal on 25 June 2018.

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