The consolidator responded to media speculation that it was planning to raise £800m (€941m, $1.05bn) to fund the purchase in a deal which is expected to be finalised in the coming weeks.
In a statement on the stock exchange it said: "Phoenix notes recent media speculation regarding a possible acquisition of Abbey Life Assurance Company and confirms that it is evaluating a potential transaction.
"As stated in this context, Phoenix is in advanced discussions with Deutsche Bank in relation to a possible acquisition of Abbey Life. There can be no certainty that these discussions will lead to a transaction."
In March, Sky News reported that Phoenix had hired investment bankers to advise it on acquiring the closed life company.
At the time, Abbey Life, which was bought by Deutsche Bank for £977m in 2007, was valued at as much as £3bn, although sources close to Phoenix claimed that it is really worth little more than £1bn.
In March, the Financial Conduct Authority (FCA) launched an investigation into Abbey Life's treatment of their closed-book life insurance customers after it found they had failed to inform their customers about exit charges on certain policies.
As a result, the probe could result in compensation payments to policyholders or fines for the British insurer.
In May, Phoenix agreed to acquire Axa Wealth's pensions and protection businesses through its subsidiary Pearl Life for £375m.