The retirement advantage plan enhanced annuity provides a regular guaranteed income for life where the policyholder has an impaired life expectancy due to their medical history or a serious medical condition. The income provided is higher than a standard annuity and can be paid on a monthly, quarterly, half yearly or yearly basis. A choice of index-linked options is also offered.
The annuity has two guarantee options to provide value for money if policyholders die early on, but policyholders can choose only one.
Under the minimum payment guarantee option, policyholders choose a guarantee period of between one and 10 years. If they die within their chosen guarantee period, income will continue being paid until the end of the guarantee to their spouse, civil partner or estate.
The alternative is the value protection option, where a taxable lump sum will be paid out if the policyholder dies before age 75. The value protected could be up to 75 per cent of the annuity purchase price less any income already paid.
Advisers are paid 2 per cent basic commission, based on the annuity purchase price net of any pension lump sum taken by the client). An extra 0.25 per cent commission will be paid if quotes and application are made online.
Telephone interviewing is available for IFAs who do not have the time or who feel uncomfortable with asking their clients personal health questions. A health questionnaire will be completed over the phone and the quote will, in most cases, be issued to within two hours of the interview. Annuity quote rates are guaranteed for 45 days and if the rate goes up before a client’s annuity starts, the client will automatically qualify for the improved rate.
A customer care line is also provided for clients who need support or counseling if, for example, their conditions worsen.
With a rate-driven product such as this, service can often be the reason for IFAs choosing one provider over another. MGM Advantage has indicated its commitment to good service through adviser and customer service charters, but competition may still come from providers such as Just Retirement, Prudential, Canada Life and Legal & General.