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Special-rate life annuities are life annuity products whose single premium is based on a mortality assumption driven (at least to some extent) by the health status of the applicant. The health status is ascertained via an appropriate underwriting step (which explains the alternative expression \"underwritten life annuities\"). Better annuity rates are then applied in presence of poor health conditions. The worse the health conditions, the smaller the modal age at death (as well as the expected lifetime), but the higher the variance of the lifetime distribution. The latter aspect is due to significant data scarcity as well as to the mix of possible pathologies leading to each specific rating class. A higher degree of (partially unobservable) heterogeneity inside each sub-portfolio of special-rate annuities follows, and this results in a higher variability of the total portfolio payout. The present research aims at analyzing the impact of extending the life annuity portfolio by selling special-rate life annuities. Numerical evaluations have been performed by adopting a deterministic approach as well as a stochastic one, according to diverse assumptions concerning both lifetime distributions and portfolio structure and size. Our achievements witness the possibility of extending the annuity business without taking huge amounts of risk. Hence, the risk management objective \"enhancing the company market share\" can be pursued without significant worsening of the annuity portfolio risk profile.

This title is part of UC Press's Voices Revived program, which commemorates University of California Press's mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1985.

This book examines recent changes in the landscape of retirement products and annuity markets in five countries. All the selected countries (Australia, Chile, Denmark, Sweden, and Switzerland) have mandatory or quasi-mandatory savings schemes. But they also exhibit significant differences in the structure of their pension systems, the relative importance of public pillars, the role and structure of private provision, the level of annuitization, and the structure and focus of their regulatory frameworks. Five studies have been commissioned to examine the state of annuity markets in each of these countries. The findings of these studies are summarized in the last five chapters of this book. The chapters of this book is discusses the various risks faced by pensioners and the risk characteristics of alternative retirement products, and it reviews the risks faced by providers of retirement products and the management and regulatory challenges of dealing with those risks. The chapter then discusses the risks faced by providers and reviews the challenges of various regulatory issues, ranging from the institutional organization of the market for retirement products to the regulation of marketing and pricing policies and the regulation of risk management. The chapter concludes with a brief summary of main points and conclusions.

As the cost of long-term care rises across the US, many seniors and their families face financial strain when care is suddenly needed. Medicaid compliant annuities (MCAs) offer a strategic solution within crisis Medicaid planning, helping clients qualify for assistance while preserving assets. MCAs are single-premium immediate annuities that convert countable assets into non-countable income streams, meeting strict Medicaid rules. Key features include irrevocability, equal monthly payments, actuarial soundness, and naming the state as a beneficiary. MCAs are particularly useful for married couples where one spouse needs care and the other remains in the community, as well as for single individuals facing asset depletion. When used ethically and with proper legal and financial coordination, MCAs enable clients to maintain financial security while accessing needed care. Advisers who understand this tool can provide critical support during high-stress situations, preserving both dignity and resources.

In a rich, calibrated life-cycle model, we show that well-designed mandatory pension plans significantly improve the welfare of individuals procrastinating on savings, and even improve most rational individuals’ welfare through a return tax advantage and fair annuitization. For a group of heterogeneous savers, in terms of preferences and sophistication, the best plan has contributions of 10% of income from age 30, a glidepath investment strategy, payouts following a variable lifelong annuity, and options to choose a different investment strategy and to modify the annuitization feature. This plan generates an average welfare gain of $175,000 per individual.

This paper proposes a novel high-water mark fee structure and investigates its impact on the marketability of variable annuities. To evaluate the welfare effects of holding a variable annuity, we adopt meanvariance analysis. By also examining the welfare effects of holding two alternative investments, we introduce a quantitative measure, namely a compatible set of risk aversions, to assess the marketability of the variable annuity under a certain fee structure. Comparing the compatible sets and the welfare effects of holding the variable annuity under the high-water mark fee structure with those under a constant and a state-dependent fee structure, we find that the high-water mark fee structure improves the variable annuity's marketability in two aspects: First, it makes the variable annuity preferable to the alternative investments for a broader range of policyholders. Second, when the variable annuity is preferred over the alternative investments, it produces the highest welfare for the policyholder.

OrientationAs a standard practice, retirement capital is converted into either an immediate life annuity (annuitisation), affording significant protection against longevity risk or a living annuity (self-annuitisation), exposing capital to volatile investment returns.Research purposeThis article presents a number of exploratory factors (based on annuity puzzle literature) that associate with retirees’ satisfaction levels, with respect to the eventual outcome of their living annuity choice.Motivation for the studyReticence among retirees to protect themselves against longevity risk is an annuity puzzle that has been the subject of vigorous academic debate.Research approach and methodA quantitative research approach was followed by performing an ordinary least squares (OLS) linear multiple regression analysis in order to ascertain which factors associate with the satisfaction levels of living annuitants.Main findingsThe most interesting conclusion is that, although one would expect active involvement in managing retirement capital among living annuitants to contribute to satisfaction levels, the desire to control and manage living annuity capital in the pursuance of capital growth, actually significantly contributes to retiree discontentment or dissatisfaction.Practical implicationsFinancial education and counselling with respect to optimal annuity decision-making could restore the promise of retirement income security.ContributionIdentifying the annuity puzzle factors (previously mainly reserved for immediate life annuities) that are associated with living annuitant satisfaction levels, serve as the basis for the contribution of this study.