Annuity buyers can take out a guarantee for the value of their fund which pays out if they die before 75. Until now, this guarantee has only been available for enhanced annuities.
The guarantee can be for joint or single life and for any amount up to 100 per cent of the annuity fund and, if triggered, will pay out the balance of the sum guaranteed less any income received.
Pensioners opting for the guarantee will have their income reduced by 2-5 per cent to pay for the guarantee depending on the level of protection they have chosen to take.
Annuity Direct director Stuart Bayliss says the option is welcome but will only be of limited appeal as most single life annuitants will expect to live past 75.