UK enhanced annuity sales reached £4.48bn in 2012, an increase of 49% from the previous year, according to research from a pension consultant.
Figures from Towers Watson show second half sales in 2012 hit £2.49bn. Sales in October to December also reached a "quarterly record" at £1.32bn.
Sales of annuities which provide higher incomes for those with medical conditions or negative lifestyle factors have increased year-on-year.
In 2010 total enhanced annuity sales reached £2,4bn and £3,01nn in 2011.
Mike Williams, a leader in the insurance management consultancy team at Towers Watson, said: "2012 sales approaching £4.5bn is yet another landmark in the enhanced annuity market. Over 85,000 consumers benefited from higher pension incomes because their medical condition or lifestyle has been assessed and a lower than average expectation of life anticipated. "
However, Williams said despite the latest "record" level of sales, enhanced annuities are still only about 20% of the total annuity policies sold.
He added: "The current range of medical conditions and lifestyle factors that can lead to enhancements suggests a greater proportion of retiring consumers could benefit.
"Looking ahead, the impact of the Financial Services Authority thematic review of annuities looks set to provide further support for the use of individualised underwriting based on health and lifestyle related factors to enable retirees to make the most of whatever pensions savings they have."
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