Figure 2 shows the effect of varying the term for a level-premium life insurance product on the 99 percent final-year VaR of a portfolio with life annuities
. The 99 percent final-year VaR is lower for the shorter terms.
Actuarial Present Value for Continuous Life Annuities
. In order to analyze the actuarial present value of this class of annuities, we first consider the whole life annuity payable continuously at the rate of 1 per year.
(46) With separate accounts, the life annuities
of the beneficiaries are more easily defined.
SOURCE: "HOW DO RETIREES VALUE LIFE ANNUITIES
? EVIDENCE FROM PUBLIC EMPLOYEES," CHALMERS/REUTERS
To boost annuitization rates among retirees, the authors recommend that plan sponsors reduce search costs by incorporating life annuities
into defined contribution retirement accounts as well as presenting participants a number of lifetime annuity payment options.
While he noted that the number of Boomers currently using fixed life annuities
remains exceedingly small, that appears to be changing, Weisbart added.
(Refund guarantees are offered with contracts covering a single life and joint life annuities
that terminate on the first death, but refund guarantees are not likely to be found with joint and survivor annuities.)
I am well aware that there is resistance to life annuities
and the loss of liquidity entailed.
The industry has been developing many products intended to provide this guarantee, including lifetime guaranteed withdrawal benefits, deferred life annuities
and period-certain annuities with flexible withdrawal options.
was led by its variable annuities business, which jumped nearly 50% to $1.43 billion in sales compared with $928 million, McInerney said, but improvements were also seen in fixed individual life annuities
, which doubled to $124 million, and fixed annuities, which jumped from $308 million to $478 million.
are financial instruments that allow an individual to exchange a stock of wealth for a stream of income that continues for life.
The development of such a magic methodology lay in the world of probability theory and the demographic data, which became bedrock to life insurance and life annuities
as they evolved during the eighteenth century and after.