Annuities: Is this Normal?

tfc

I have just received an enhanced annuity quotation from Just Retirement Ltd. As expected, I had to provide a completed set of medical conditions forms, and agree to them contacting my doctors.

The quote however contains the disclaimer :-
"The annuity contains an enhancement based on the lifestyle and medical conditions provided to us. We will request confirmation of these details from the medical practitioner. If this varies from the information provided, the amount of the annuity may reduce."

Now my understanding is that if I accept the quote, then I am bound, and I cannot under any circumstances change it. However, it seems from this disclaimer that they can change the amount of the annuity to whatever they like citing "differences" in the information provided by me and the doctor.

It think that if I give them permission to contact the doctor, then they should do so before quoting, as otherwise they are putting me at a disadvantage by forcing me into a contract that they are able to change, but I am not able to withdraw from.

Oh, and the quotation dated 9th March, arrives on 18th March, and is only valid till the 22nd March. (Plenty of time for me to think about it then?)

Is this normal practice, or Just Sharp Practice?

I notice that they have only been around for a few years. The company is described :-
"Just Retirement is owned by Avalon Acquisitions Limited, a company backed by funds advised by Permira Advisers LLP." This seems to be a strange financial basis for a company that you are hoping will pay your annuity for the rest of your life. There is no/little information on Avalon, and Permira are a private equity firm. Presumably, if Avalon/Just Retirement are not too exciting, then Permira can just flog them off.

Velcro_Hotdog

They can't force you into a contract, you have a cooling off period

bilbo51

Surely you don't expect them to say: "We'll be checking with your doctor and if it turns out that you've told us a pack of lies, don't worry, we'll still bend over backwards and pay you the full whack."

dunstonh

I have just received an enhanced annuity quotation from Just Retirement Ltd. As expected, I had to provide a completed set of medical conditions forms, and agree to them contacting my doctors.

Thats an unsual way of doing it. Normally you fill in the common quotation form and supply it to all the enhanced providers as it saves duplication. They then come back with the figures and you haggle them up from there. Thats so much easier.

What made you pick just retirement? I havent found them coming out with good figures for some time now.

Is this normal practice, or Just Sharp Practice?

You can still cancel if you dont like it as long as its sorted within the cancellation rights period. If you have more significant health issues that require more in depth underwriting checks then you can start the process earlier and delay the transfer process or open market option (Depending on which version you are using).

You should be asking your IFA these questions. Thats what Just Retirement are paying them for. Out of interest, how much better were JR compared to the alternatives? Did your IFA haggle the figure upwards as that seems to be the only time they become competitive in recently.

SallyG

24) Deposits Received from Reinsurers
The Group’s subsidiary Just Retirement Limited has entered into long-term reinsurance arrangements with two European reinsurance
companies. Under the reinsurance treaties 66% of the liability under reinsured policies written is ceded to the reinsurers, who
deposit back an amount calculated to cover this risk on a deferred basis, so as to mitigate the credit risk that would otherwise be
borne by Just Retirement Limited.
In addition to the reinsurance of the mortality risk, Just Retirement Limited receives a benefit for FSA solvency purposes, because the
reinsurance premium paid to the reinsurers only represents 95.5% of the value of the reinsured liabilities on the treaty basis with
the resultant capital benefit utilised as solvency capital. The repayment of the reinsurance premium deduction is contingent upon
the emergence of surplus under the FSA valuation rules; this liability is not taken into account in determining the regulatory Pillar 1
solvency of Just Retirement Limited. The additional liability is taken into account within these financial statements (see note 22).
The amount of deposits received from reinsurers that is expected to be settled more than one year after the Statement of Financial
Position date is £1,680.3m (2009: £1,141.0m). None of the movement in the deposits received from reinsurers is attributable to
changes in credit risk.

SallyG

Interesting company.
http://www.justretirement.com/Default/AboutUs/Investorrelations.aspx

Are most annuity providers this complicated?

tfc

Thank you all for your replies.

bilbo51:
Surely you don't expect them to say: "We'll be checking with your doctor and if it turns out that you've told us a pack of lies, don't worry, we'll still bend over backwards and pay you the full whack."

No, I don't.

It isn't a question of "telling a pack of lies". I can only answer the questions on their form. It is presumably a specialist area. I am not a medical specialist, so there is very likely be some difference in details, which could be subject to interpretation.

If they ask for my permission to contact my doctor, I expect them to do so, before they give the quotation. There's no point in giving a quotation unless it can be relied upon. Alternatively, it is only sensible that, if they are not giving a firm quotation, I shouldn't have to be bound until they have confirmed it.

Velcro Hotdog:
"They can't force you into a contract, you have a cooling off period"

Well they don't specify how long they will take to verify the details. On the other hand they do specify the length of the cooling off period. Tough luck if they decide there are "differences" after the cooling off period?

dunstonh:
Thats an unsual way of doing it. Normally you fill in the common quotation form and supply it to all the enhanced providers as it saves duplication. They then come back with the figures and you haggle them up from there. Thats so much easier.

What made you pick just retirement? I havent found them coming out with good figures for some time now.

That's exactly what I did. I used an adviser, one of the big ones, and filled out the forms which went to a number of companies. The advisor presented me with Just Retirement as the best quote. (They were 5% better than the next best) The only information I got about the other companies was their actual quote value. For Just Retirement, I got the complete set of forms from the quotation.

I did not like the look of Just Retirement, even though they were the best quotation, because they don't seem to be a conventional assurance company. I asked the advisor about this and they just pointed out that they were covered under the FSA scheme and they give best quotes so. . . .

There was no haggling by the advisor. I got the figures, queried the values vs Just Retirement stability and got the answer I mentioned. So, I went to no. 2 on the list and attempted to haggle it up myself. At first I was told they would match First Direct, but then when they came out with the quote, it was not improved over their original quote.

Hence my question "Is this normal?" or more precisely "Is it normal for annuity companies to give an enhanced quotation without checking the medical details, and then force the annuitant to accept a changed actual value?"

SallyG:
Thanks, that's deep water for me. I don't understand what the details you supplied in your first post ref Just Retirement Ltd. actually mean, but I do understand your subsequent post, and that is what I am wondering too.


I guess that I need to get back to the advisor and, this time, explicitly state the conditions I want to see. e.g. a firm quotation, a proper time to respond to the quotation, a stable company etc. Foolishly, I thought completing the (comprehensive) forms was going to be enough.