Canada Life will join Legal & General, Aviva and Prudential in offering postcode annuities by the fourth quarter.
Canada Life and Aegon are the only major annuity providers not to price their annuities based on customers’ postcodes.
Experts claim that given L&G, Aviva and Prudential control more than 40 per cent of the annuity market, Canada Life and Aegon are exposing themselves to the significant commercial risk of being left with healthier, less profitable lives.
Aegon says it has no immediate plans to follow Canada Life into this space.
Hargreaves Lansdown pension analyst Nigel Callaghan says: “Postcode annuities are here to stay. With the three major annuity insurers – L&G, Aviva and Prudential – all now offering them and Canada Life set to, Aegon is facing a huge risk by failing to do so.
“This lack of pricing sophistication could leave the firm inadvertently insuring annuitants with overly long life expectancies.”
L&G was the first firm to launch postcode annuities in September 2007. Aviva and Prudential followed last year.