This month I was going to have a rant about the RDR, then I decided to rant about gender annuities (there is plenty to rant about at the moment) but then I saw a press release from MGM about annuities for those snore, which caused me momentarily to do the opposite of a rant, whatever that is.
This press release ‘Snoring could lead to a wealthier retirement’ has both a humorous side and a serious side.
Picture the cartoon; man is asleep, snoring and his wife is awake growling saying: “At least I can afford to buy ear muffs with the extra annuity from MGM.”
The serious side is less humorous because perhaps it represents the firing pistol in the race to move away from good health annuities to lifestyle annuities for all. Take me for instance. My wife tells me that I snore like a trooper and should go and see a doctor, which I did, and was told to lose weight, which I did, but the snoring continues.
If in a few years time when I reach annuity buying age, does this mean I will qualify for an increased annuity? This is the same chap who thinks nothing about jumping on a bike, riding 20 miles and can still beat his 13 year old son over a 25 metre dash on the beach. I don’t think of myself in poor health and would not expect to get an increased annuity.
So is this the end of standard annuities and the dawn of lifestyle rates for all? The cynic in me has always said that the way forward after gender neutral annuity pricing is to ask more lifestyle questions. What’s your shoe and hip size is a good one. My friend Steve Lewis told me off when I suggested this and he quite rightly pointing out that insurance company would be in serious trouble if they tried to circumnavigate the gender neutral rules.
But I don’t think I am wrong when I predict that very soon the percentage of people providing details about their health and life styles when applying for annuities will increase considerably, as insurance companies come up with ever more imaginative ways to collect information about health and lifestyles.
It’s not all good news though, because myself and others who live and breathe annuities have detected a trend for overzealous sales people overstating health and lifestyle issues when completing health questionnaires. Clearly, clients should be encouraged to disclose all relevant information, but they should also know if they exaggerate their medical conditions, it could back fire. Insurance companies do make checks and if the wrong information had been provided, the annuity could be reduced to reflect the correct state of health.
Billy Burrows is director of the Retirement Academy