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 In recent years, annuity regulations were changed and the tax incentives were withdrawn.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)