British "impaired life" annuity sales soar - study

* 2009 sales up 24 percent to 1.79 billion pounds - study

* Impaired life annuities have 17 pct market share - study

LONDON, March 8 (Reuters) - British sales of "impaired life" annuities, which offer higher payouts to smokers and others likely to die prematurely, rose a quarter last year in a sign of increasing popularity among retirees, according to a study.

Sales of the products, also known as "enhanced" annuities, rose 24 percent to 1.79 billion pounds ($2.72 billion) in 2009, consultants Towers Watson said on Monday.

Enhanced annuities now account for about 17 percent of the British annuity market, Towers Watson said, up from 7.8 percent in 2001.

"2009 was another record year for enhanced annuity sales and means more consumers are benefiting from higher pension incomes," said Towers Watson senior consultant Andy Sanders.

Enhanced annuities were introduced into Britain in 1995, and are offered by life insurers including Aviva (AV.L), Axa (AXAF.PA), Canada Life, Legal & General (LGEN.L) and Prudential (PRU.L).

Annuities, which offer retirees a fixed monthly income for the rest of their lives in return for a lump sum paid on retirement, become more expensive for insurers to honour in the event of customers living longer than expected. (Reporting by Myles Neligan; Editing by Dan Lalor) ($1 = 0.6590 pound)