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Aviva: All annuities should be underwritten automatically

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Aviva has increased the protection it offers to annuity customers as the provider calls on the industry to automatically underwrite all annuities.

Aviva has today announced improvements to the standard guarantees it offers on its annuity products.

First, it is introducing an “annuity value protection” promise which means if a person dies within 90 days of buying an annuity, the provider will return their original pension fund to their estate.

Aviva is also implementing a “default one year guarantee” so if a customer dies after 90 days of taking an annuity, but within a year of the policy beginning, the provider will continue to make annuity payments to their estate for the remainder of the first year.

In addition, Aviva wants the industry to incorporate personal underwriting of annuities into the shopping around code of conduct launched by the Association of British Insurers in December 2011.

An Aviva spokesman says the provider sends out a medical questionnaire alongside the retirement packs distributed to customers. It wants all providers to adopt a similar process so everyone gets an annuity that reflects their own personal circumstances.

Finally, Aviva wants non-advised annuity sales, which are not covered by RDR rules, to meet the same cost transparency standards as advised sales.

Aviva managing director of at retirement Clive Bolton says: “Aviva is committed to leading by example and we believe everyone – retirement providers, Government, regulators, advisers and individuals alike – should take responsibility to act on these ideas and help to provide financial security and peace of mind for current and future retirees.

“This approach rests on the desire to ensure that people receive an appropriate level of advice to suit their individual circumstances and they fully understand the type of help they are getting.

“Therefore, we call on the industry to ensure non-advised annuity sales meet the same cost transparency standards as advised sales.

“We have also enhanced consumer protection on our annuity products by increasing guarantees to reassure customers and further increase their confidence in this sector. We hope that this is just the first step and that the rest of the annuity industry will follow our lead by making such guarantees a standard feature of their annuity offering.”


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Sounds like a very positive move not only the guarantees and underwriting but also ensuring consumers fully understand the type of ‘help’ they are getting and that it is not ‘free’.

  2. It should actually be the responsibility of the adviser to ensure the annuity is constructed correctly with appropriae guarantee periods and if required, spouses pension (up to 100%)
    Not that I do not welcome Aviva’s stance, but a one year guarantee is worthless.

    Lets’s do our job properly and there would be no problems.

  3. Does anybody write annuity business without at least a 5 year guarantee?

    Aviva is guilty of yet more red herring PR.

  4. Can’t help being more and more impressed by AVIVA as the years pass

  5. I welcome these moves – a big step in the right direction! However, experience shows us that only 18-25% of annuitants bother to complete the CQRF if sent it as a paper doc. We propose u/w every annuitant & their spouse before quoting, via a specialist at their home, with decisions guaranteed by reinsurers. Then quotes will highlight enhanced / impaired etc to ensure consumers get the best deal on a case by case basis. It’s not difficult to do & the facilities are available now. Do advisers agree this is how we should evolve the industry?

  6. An very good move by Aviva. Rates based on life expectancy much fairer than the EU approach that male and female rates should be equalised

  7. @ William Watling

    Completely agree with you, obtaining bespoke quotes offers the best outcome for annuitants and it’s easy to do as you say.

    Met someone recently who had applied for an annuity on line using a non-advised service. When she contacted the firm, she was told at outset that “there would be no cost directly” but discovered after her annuity had been set up that 3% had been taken from her fund. Non-advised annuity arranging should be subject to the same adviser charging rules and if no advice is being provided, it should cost less!

  8. “…and if no advice is being provided, it should cost less!”

    Interesting and logical-looking view, William.

    I’d be interested to see what PICA chairman / Hargreaves analyst Tom McPhail would make of it.

  9. “…and if no advice is being provided, it should cost less!”

    This is one of the emerging scandals post RDR

    Providers are pricing differently, dramatically differently, to advised and non-advised routes, firms like Mr McPhail’s are being given rates which are better than an advised factory gate priced adviser can achieve before any charge for advice.

    This is pushing clients to take a non-advised, or as I prefer almost-advised, route as they can get a better rate. This is anti-competitive and one would expect PICA if it serves the industry to take a stand against this. however PICA is an large company cartel set up to skew the market in this way whilst purporting to work for clients interests.

    None of the pinks seem to want to act on this, i wonder where the pressure to control this scandal is coming from.

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