Annuities are still the most popular retirement solution for people with a pension, especially for those with smaller pots. Individuals could enhance their retirement salary by as much as 40% by researching different annuity options and being open about their medical history. Scottish Widows estimates 45% of its customers could qualify for an enhanced annuity.
The Scottish Widows Enhanced Annuity will be available to customers between the ages of 55 and 75, with a minimum total investment of £5,000. It will be offered across the spectrum from lifestyle and mild conditions, to more serious medical conditions.
The new product will be available on single or joint life basis, a guaranteed period of 0, 5 or 10 years can be selected, as well as the option to increase income each year by a fixed rate or vary in line with RPI. The payment frequency of the annuity can be yearly, half yearly, quarterly or monthly in advance or arrear.
The Scottish Widows Enhanced Annuity is available to advisers through three market portals - Avelo, Assureweb and TOMAS. A dedicated service team will also be available to help with applications. Scottish Widows will provide intermediaries with its guaranteed best priced quotes first time and underwriting decisions will be automatic for up to 85% of applications. The enhanced annuities will be underwritten by RGA (Reinsurance Group of America).
Mike Teall, Head of Annuity Propositions, Scottish Widows said:
"The enhanced annuity market will be worth nearly £6bn this year and is expected to grow by up to 10 per cent yearly due to an ageing population and baby boomers reaching retirement. For Scottish Widows it's absolutely the right time to enter the market with a competitively priced enhanced annuity and this is part of our plan to increase our share in the annuity market to over 10 per cent in the next few years.
"In the post-RDR world, intermediaries are under increasing pressure to provide customers with a quick and cost effective service and with instantaneous quotes. The approach we're taking can save days if not weeks in providing quotes, with the additional benefit of greater security and easier record keeping with the online portal.
"We are committed to helping customers understand the annuity options available and help them to get the very best retirement salary from a company they know and trust."
