Norwich Union has entered the impaired life annuity market.
The Norwich Union impaired life annuity option is designed to produce a higher income than standard annuities for people who suffer from a serious illness that reduces their life expectancy.
Figures from Norwich Union show that a 60-year-old male who is expected to survive 10 years, with a 10 per cent chance of surviving over 15 years would receive an annual income of £3,423 on its standard annuity and £5,535 under its impaired life annuity option based on a £50,000 premium and a five-year guarantee period.
To qualify for this annuity, annuitants will need to suffer from conditions such as cancer, stroke or heart attack. However, other conditions such as diabetes can also enable them to qualify if life expectancy is reduced as a result.
Research conducted by Norwich Union has found that 10 per cent of annuitants suffer from serious conditions, but their choice within the impaired life annuity market is limited.
The Norwich Union impaired life annuity option is available on a single or joint life basis for annuitants with pension pots of at least £50,000. The lower the life expectancy, the higher the amount of income the annuitant will receive.
Income can be taken by the annitant on a monthly, quarterly, half-yearly or annual basis. The product is fully underwritten, so the annuitant's medical history will be taken into account when calculating the income he or she will get.
David Marlow, head of marketing at The Annuity Bureau, says the impaired life annuity market is growing and sees Norwich Union as a welcome addition to the impaired life annuity market which is dominated by small niche players.