Tag: annuity cost
The brief’s key findings are: “Longevity bonds” would allow insurers and pension plans to hedge aggregate longevity risk. The bonds’ coupon would rise if a cohort lived longer than expected, offsetting higher annuity costs. Longevity bonds would lower capital requirements for insurers and reduce risk for pension plan sponsors. Governments could take the lead in…
Introduction An annuity provides an individual or a household with insurance against living too long. In exchange for a one-time premium payment, the insurer agrees to make periodic payments to the insured for life. In theory, annuities seem like a valuable product for many retirees given an uncertain date of death. However, in practice, few…