UK - Sales of enhanced annuities rose by almost a third in 2008, Watson Wyatt says.
The annuities offer higher pension payments for suffers of serious medical conditions or those who have 'negative' lifestyle factors, such as weight, smoking, geographical or occupational dangers.
Watson Wyatt senior consultant Andy Sanders, said: "Conventional annuities, still the lion's share of the current market, are increasingly being segmented by the application of full or partial underwriting, whether based on health or on postcode as a proxy for expectations of longevity.
"These, and other means of segmentation, are good news for consumers as they provide more options with which to maximise their income from pensions savings. It does, however mean a more complex environment within which product providers have to operate in order to be competitively priced."
Since their launch in 1995, sales enhanced annuities have grown dramatically, with sales in 2001 of £420m and a total open market share of 17%.
They peaked in 2003 with a total market share of 23.1% and sales of almost 700m, before declining slightly.
In the previous three years, sales have increased again, topping £1bn for the first time in 2007.
Currently 11 providers offer such products: Axa, Canada Life, Just Retirement, Legal & General, LV=, MGM Advantage, Norwich Union, Partnership Assurance, Prudential, Reliance Mutual and Scottish Widows.
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