Longevity Insurance

Longevity Insurance

An insurance policy that pays a benefit if the policyholder lives to a certain age. For example, in exchange for the premium, longevity insurance provides a lump sum to the policyholder, for example, if he/she lives to 90. Longevity insurance is comparable to life insurance; the chief difference is that the policyholder collects the benefit merely if he/she lives long enough. Longevity insurance protects against longevity risk.
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Long-term care insurance (LTC) and longevity insurance can mitigate serious retirement risks.
They've seen the variability of the economy through the financial crisis and they see the need for protection, some kind of longevity insurance.
A new report, De-risking journeys of large pension schemes, which surveyed over 40 of the UK s largest private sector pension schemes, each with over Au1billion in pension fund assets, shows that: Nearly two-thirds, (64%) are looking to arrange some form of insurance de-risking solution to cover their liabilities, rather than retain and manage the risk themselves; Nearly half, (47%) of interested schemes said that they were looking to arrange buy-ins or buyouts in the next 5 years; and Over two thirds, (67%) of schemes interested in longevity insurance, were looking to implement a solution in the next 5 years.
Tools like guaranteed income annuities, longevity insurance, long-term care insurance, hybrid policies, revocable living trusts and RMD withdrawal strategies are too often ignored in favor of accumulation-focused methods that are much more comfortable to advisors.
Longevity insurance is a type of annuity that can address that challenge.
Global Banking News-July 2, 2014--New US tax rules to allow workers to purchase longevity insurance
Pension buy-in transactions have just arrived and longevity insurance will follow, but demand will likely be modest until there is greater awareness of pension longevity risk in the United States.
Many people have heard the term, but few have seen the power of longevity insurance.
Indeed, none other than the Obama administration has started touting these annuity-like vehicles, which are designed as longevity insurance "wrappers" around defined contribution plans, as a potential solution to the looming retirement income shortfall.
Various Social Security reform proposals include options intended to address concerns about benefit adequacy for vulnerable groups: (1) Guaranteeing a Minimum Benefit; (2) Reducing Work Requirements for Eligibility; (3) Supplementing Benefits for Low-income Single Workers; (4) Adopting Earnings Sharing; (5) Reducing the Marriage Duration Required for Spousal Benefits; (6) Providing Caregiver Credits; (7) Increasing Survivor Benefits; and (8) Providing Longevity Insurance.
The strong levels of competition in the longevity insurance market are also a factor in opening up this market.