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An annuity is an  important component of life  insurance. It helps risk providers in achieving market penetration and bigger investment income. 
In many economies of the world where insurance is a sucess story, pension annuities are a major factor for growing pool of funds for the life market. Regrettably however, but the situation in Nigeria, is rather different; this in particular following the delay in full take-off of annuities business, despite the provision in the Pension Reform Act of 2004.
Section 4 of the Act provides for compulsory annuity as an alternative to programmed withdrawal, to be purchased by a retiree under the scheme and this has undoubtedly created enormous opportunities for enhanced life insurance business. Although for many years, life insurance in Nigeria made slow progress, contributing very little to the overall premium income of the market and the overall GDP of the economy.  
For example, while non-life insurance contributed $678 million, about 88.4 percent, which is equal to the N90 billion total premium of the industry in 2007, the life insurance market contributed $127 million, about 15.6 percent of the industry’s premium income. Nevertheless, in terms of market penetration which currently stands at 0.6 percent in Nigeria, life business contributes less than 0.1 percent, while non-life adds 0.5 percent; again insurance density for life insurance is mere $0.9, indicating that the market is highly underdeveloped.
Since industry operators believe that there is need for more awareness creation among the insuring public on the need for insurance, experts in other developed markets still believe that annuities must complement life insurance for it to succeed, they also see the Nigerian market as a big opportunity which has remained untapped, and that growing the annuity business would make a remarkable difference indeed.
Francois Venter, from Metropolitan Employee Benefit, South Africa, quoting Rusconi, affirmed while speaking at a two-day workshop on ‘Management of Pension Annuities in Nigeria,’ organised by the Nigerian Insurers Association (NIA) that the “Annuity markets are crucially important, for they play a substantial part in determining the well-being of their customers at a time in their lives when their human capital is behind them and the income alternatives are few.”
Rotimi Okpaise, consultant, HR Nigeria, also stated that annuity business provides new expansion opportunities for insurers, and this exceeds that which is provided by the pension Act. 
Quoting Peter Drucker, he noted that providing financial protection against the new risk of dying soon enough may well become the next century’s major and most profitable financial industry, adding that pricing needs to be carefully done including expenses, guarantees, while providing for long-term risks. 
Wole Oshin, chairman, NIA, observed that the workshop was necessary to create that fresh drive to boost life insurance business, through the introduction of new product lines and optimal implementation of compulsory insurances under the various legislations on insurance, life insurance inclusive. 
According to him, the training is imperative, as it is designed to sharpen the skills and competencies of those who are currently providing one form of annuity or the other over the years, taking advantage of the provision of Section Two of Insurance Act 2003, which classified annuity as a type of life insurance or long-term business. 
Oshin noted that the FSS 2020 document expects the insurance industry in Nigeria to become the insurance market of first choice, noted for high level of capacity, transparency, efficiency and safety, and attain 15th position in world insurance premium generation, while the insurance gap is also expected to be reduced from 94 percent to 30 percent by 2015. 
He, however, expressed confidence that the insurance industry will achieve this laudable feat, with hopes that the life industry with opportunities provided by this annuity will contribute adequately to the economy.