The new regulation on unisex insurance provides various opportunities for the product development. With regards to this matter, there is a broad discussion on how enhanced annuities from the UK market can be considered as an alternative solution to traditional annuity products. To date, these products were not successful on the Central European market since it seems like a bet on the premature death. In such cases, critical illness policies have been considered and preferred.

Furthermore, enhanced annuities are no solution to the longevity risk of those who did not yet suffer a serious illness before entering the contract.

The Generali Life Insurance AG has investigated the framework under which enhanced annuities could be successful. The result is a combination of the advantages of the enhanced annuity and the critical illness insurance concept.

Starting point is a flexible deferred annuity where the savings accumulation period is followed by a flexible pay-out phase ending at the age of 85. The final retirement starts after the pay-out phase.

If the customer suffers a serious illness such as cancer, heart attack or stroke in the flexible pay-out phase the client can claim a lump-sum benefit of at least 20 percent of the contract value as financial aid which is guaranteed at the commencement of the insurance. The original annuity amount and the annuity start date remain unchanged. In case of later occurrence of long-term care an additional increase of the monthly annuity can be claimed.

This concept has been realized by close interaction of different calculation elements such as an adjustment of the mortality table and a changed form of profit participation.

To our knowledge this product approach is unique in its intention as well as in its actuarial design.