LONDON -- I believe shares in life insurer Resolution (LSE:RSL) are on the cusp of a meaty upward rerating.

In my opinion there is a huge variance between the current share price and the firm's ultra-generous dividend policy, as the yield runs well ahead of the 5.4% sector average forward reading.

A delectable dividend selection
Resolution is a favorite among income investors owing to its record of awarding shareholders with dividends well ahead of the forward FTSE 100 average.

The company increased its full-year payout to around 21.1 pence per share in 2012, a 6% annual rise, and analysts expect the dividend to keep edging north in the medium term -- a dividend of 21.2 pence per share and 21.4 pence per share are expected this year and next.

Although these increases are clearly at a much lower rate than those previously supplied, dividends for 2013 and 2014 still carry massive yields of 8.4% and 8.5% respectively. These incomes compare starkly with a prospective yield of 3.3% for the wider FTSE 100 index.

Investors should be aware that these payments boast scant dividend cover, however, with coverage of just 1.1 times and 1.3 times forward earnings for this year and next. This coverage is well below the largely held security touchstone of 2 times.

Still, the company has still hiked dividends even in times of previous earnings pressure, and lifted last year's payout despite a 61% fall in earnings per share.

As well, the company has an exceptionally strong balance sheet -- its sustainable free cash surplus rose to 300 million pounds last year -- and is in a strong position to hike free cash flow if required to maintain dividends though cost-saving initiatives and lifting assets under management. Last year's dividend was 117% covered by cash passed on to Resolution's holding companies.

Double-digit earnings increases expected
On top of excellent dividend prospects, investors can look forward to sterling earnings growth over the medium term that should buttress these juicy shareholder returns. Analysts expect earnings to jump 20% in 2013, to 24 pence per share, before punching a 14% increase the following year to 27 pence per share.

Resolution was recently trading on P/E ratios of 10.5 for 2013 and 9.2 for 2014, representing a vast markdown to the average forward earnings multiple of 12.2 for the broader life insurance sector. As well, the insurer carries price/earnings to growth (PEG) levels of 0.5 and 0.7 for this year and next, well below the bargain threshold of 1 and underlining the stock's position as a great value pick.

Bolster your investment income with the Fool
If you already hold shares in Resolution and are looking for more FTSE 100 winners to really jump-start your investment income, then you should check out this brand-new and exclusive report covering a multitude of other premium payers right now.

Our "5 Dividend Winners to Retire On" wealth report highlights a selection of tasty stocks with an excellent record of providing juicy shareholder returns. Among our picks are top retail, pharmaceutical and utilities plays which we are convinced should continue to provide red-hot dividends. Click here to download the report -- it's 100% free and comes with no obligation.