With progressively ageing societies and a gradual withdrawal of state support in most developed economies around the world, people face increasing challenges when planning for their retirement and care needs in later life.
This fast changing economic and demographic environment is creating a growing demand for products specifically designed for those reaching retirement.
At Hannover Re, we recognise the importance of this market, the heterogeneous requirements of the target group and the potential product that addresses the issues at hand. We are strongly committed to working with our clients to design new and innovative propositions. We enable our clients to meet the needs of people facing retirement, extend their portfolios, and contribute to a more resilient society for the future.
Our clients benefit from the leading role we have secured through pioneering new approaches in longevity solutions such as deferred annuities at retirement, unit-linked annuities, equity release solutions, parents protection plan, immediate needs products and underwritten annuities.
We have developed deep insights into mortality and morbidity experience among older lives. This provides us with a sound knowledge base, allowing us to develop the next generation of longevity products on a worldwide basis together with our clients.
An underwritten annuity allows people who are in poor health to receive a higher regular income in recognition of the fact that they, on average, have a lower life expectancy than a healthy person does.
Since the mid-90s, primary insurers in the UK are offering underwritten or so-called enhanced annuities. Tax advantages encouraged people to invest their money in an annuity and most people at retirement did in fact purchase an annuity. In recent years, annuity regulations were changed and the tax incentives were withdrawn. Today, pensioners have complete freedom to either draw down their pension pot, continue the investment or to buy an annuity.
Hannover Re has collaborated with a number of providers to support product development and encourage market growth. The enhanced annuity market is sophisticated and the providers use a common medical questionnaire, the retirement health form.
A number of portals allow independent financial advisers to access information on products and providers, request comparative quotes and transact new business, including online medical underwriting. Customers obtain immediate guaranteed quotes from a couple of providers by simply answering a limited number of questions. Most cases are assessed automatically and only a few complex cases e.g. rare diseases require manual underwriting and a general practitioner’s report.
Hannover Re has more than 20 years of experience and expertise in the enhanced annuity market. Our automated underwriting system allows for immediate guaranteed quotes and enables Hannover Re and its clients to enter the market of underwritten annuities on a profitable basis.
Although enhanced annuity volumes decreased post the pension scheme act in 2015, Hannover Re continues to value the enhanced annuity market as an attractive segment and is eager to take up the challenges the new regulation brings.
Enhanced annuities (2021)
Immediate needs annuities pay a guaranteed income for life to help cover regular long-term care costs in exchange for a single lump sum payment.
Immediate needs annuities (2021)
Equity release solutions address elderly people that are “cash poor, but asset rich” – their asset being their home. The idea is to release equity from their home while retaining the right to live there until death or move into a care home. Apart from the right of residency, the beneficiary (i.e., the one who owns the home today) might receive a lump sum and/or regular instalments such as a life annuity.
Equity release reinsurance (2021)
Parents protection plan
The parents protection plan pays an income to parents if they outlive their children. This product is targeted at regions and countries where it is a cultural obligation that children help their parents financially.
Parents protection plan (2019)
Unit-linked retirement income
Unit-linked retirement income pays an income for life with investment up- and downside.
Unit-linked annuities (2021)
Since life expectancy has increased globally over the last years there is a worldwide need for at-retirement solutions.
Our partners benefit from our global expertise in product design and development, actuarial pricing and medical underwriting – and from our flexibility and openness to exploring new ideas.
Hannover Re is a powerful partner for any company seeking to create and maintain a competitive edge when it comes to longevity risk and developing innovative tailor-made solutions for an ever-growing consumer group worldwide.