scholarly journals Annuity and life annuity contract used as a home reversion

2021 ◽  
Vol 33 ◽  
pp. 43-60
Author(s):  
Katarzyna Dziewulska
Keyword(s):  
Life Annuity

Solvency Capital, Pricing and Capitalization Strategies of Life Annuity Providers

2012 ◽  
Author(s):  
Maathumai Nirmalendran ◽  
Michael Sherris ◽  
Katja Hanewald
Keyword(s):  
Life Annuity ◽  
Solvency Capital

Life Expectancy in Individuals With Type 2 Diabetes: Implications for Annuities

2009 ◽  
Vol 30 (3) ◽  
pp. 409-414 ◽  
Author(s):  
Hermione C. Price ◽  
Philip M. Clarke ◽  
Alastair M. Gray ◽  
Rury R. Holman
Keyword(s):  
Type 2 Diabetes ◽  
Life Expectancy ◽  
Cholesterol Level ◽  
Total Cholesterol Level ◽  
Insurance Companies ◽  
Age At Death ◽  
Life Annuity ◽  
Uk Government ◽  
The Uk

Background. Insurance companies often offer people with diabetes ‘‘enhanced impaired life annuity’’ at preferential rates, in view of their reduced life expectancy. Objective. To assess the appropriateness of ‘‘enhanced impaired life annuity’’ rates for individuals with type 2 diabetes. Patients. There were 4026 subjects with established type 2 diabetes (but not known cardiovascular or other life-threatening diseases) enrolled into the UK Lipids in Diabetes Study. Measurements. Estimated individual life expectancy using the United Kingdom Prospective Diabetes Study (UKPDS) Outcomes Model. Results. Subjects were a mean (SD) age of 60.7 (8.6) years, had a blood pressure of 141/83 (17/10) mm Hg, total cholesterol level of 4.5 (0.75) mmol/L, HDL cholesterol level of 1.2 (0.29) mmol/L, with median (interquartile range [IQR]) known diabetes duration of 6 (3—11) years, and HbA1c of 8.0% (7.2—9.0). Sixty-five percent were male, 91% white, 4% Afro-Caribbean, 5% Indian-Asian, and 15% current smokers. The UKPDS Outcomes Model median (IQR) estimated age at death was 76.6 (73.8—79.5) years compared with 81.6 (79.4—83.2) years, estimated using the UK Government Actuary’s Department data for a general population of the same age and gender structure. The median (IQR) difference was 4.3 (2.8—6.1) years, a remaining life expectancy reduction of almost one quarter. The highest value annuity identified, which commences payments immediately for a 60-year-old man with insulin-treated type 2 diabetes investing 100,000, did not reflect this difference, offering 7.4K per year compared with 7.0K per year if not diabetic. Conclusions. The UK Government Actuary’s Department data overestimate likely age at death in individuals with type 2 diabetes, and at present, ‘‘enhanced impaired life annuity’’ rates do not provide equity for people with type 2 diabetes. Using a diabetes-specific model to estimate life expectancy could provide valuable information to the annuity industry and permit more equitable annuity rates for those with type 2 diabetes.

scholarly journals The Reciprocal Generalized Inverse Gaussian Frailty with Application in Life Annuity Business

2020 ◽  
pp. 112-131
Author(s):  
Walter Onchere ◽  
Richard Tinega ◽  
Patrick Weke ◽  
Jam Otieno
Keyword(s):  
Simulation Study ◽  
Unobserved Heterogeneity ◽  
Survival Curve ◽  
Gaussian Model ◽  
Frailty Models ◽  
Residual Lifetime ◽  
Longevity Risk ◽  
Inverse Gaussian ◽  
Life Annuity ◽  
Valuation Of Life

Aims: As shown in literature, several authors have adopted various individual frailty mixing distributions as a way of dealing with possible heterogeneity due to unobserved covariates in a group of insurers. This research contribution is to generalize the frailty mixing distribution to nest other classes of frailty distributions not in literature and apply the proposed distributions in valuation of life annuity business. Methodology: A simulation study is done to assess the performance of the aforementioned models. The baseline parameters is estimated using Bayesian Inference and a better model is suggested for valuation of life annuity business. Results: As a result of generalizing the frailty some new classes of frailty distributions are constructed such as; the Reciprocal Inverse Gaussian Frailty, the Inverse Gamma Frailty, the Harmonic Frailty and the Positive Hyperbolic Frailty. From the simulation study, the proposed new frailty models shows that ignoring frailty leads to an underestimation of future residual lifetime since the survival curve shifts to the right when heterogeneity is accounted for. This is consistent with frailty literature. The Reciprocal Inverse Gaussian model closely represents the Association of Kenya Insurers graduated rates with a slight increase in survival due to longevity risk. Conclusion: The proposed new frailty models show an increase in the insurers expected liability when unobserved heterogeneity is accounted for. This is consistent with frailty literature and thus can be applied to avoid underestimating the insurer’s liability in the context of life annuity business. The RIG model as proposed in estimating future liability by directly adjusting the AKI mortality rates shows an increase in longevity risk. The extent of heterogeneity of the insured group determines the level of risk. The RIG frailties should be considered for multivariate cases where the insureds are clustered in groups.

A New Retirement System With Provision for Variable Income

1954 ◽  
Vol 23 ◽  
pp. 327-378
Author(s):  
J. B. Maclean
Keyword(s):  
The United States ◽  
Real Income ◽  
Pension Plans ◽  
Fixed Number ◽  
Insurance Companies ◽  
Educational Institutions ◽  
Cash Income ◽  
Short Account ◽  
Life Annuity ◽  
Current Value

SynopsisThe paper describes a new type of deferred life annuity which has recently been introduced in the United States and which has been used, so far, principally in connection with the retirement plans of colleges and other educational institutions and, to some extent, in self-administered pension plans of commercial corporations. These annuities do not guarantee specific or equal money payments. The fund, which is divided into an “accumulation fund” and an “annuity fund”, is invested entirely in ordinary shares (“common stocks”). Premiums (contributions) and income from the fund are applied to purchase “accumulation units”, the value of a unit being determined monthly in accordance with stock market prices. At the retirement date of any individual the then current value of the units he owns is used to purchase a life annuity of a fixed number of “annuity units” in accordance with the then current value of a unit in the annuity fund. The successive cash payments to the annuitant are the current values of the fixed number of annuity units which he holds.The purpose of this plan is to provide a variable cash income which will, to some extent, reflect the changes in the cost of living, i.e., to provide a more constant “real income” both in times of inflation and deflation.The paper includes : (1) a short account of the origin and business of the company which has introduced this plan, and which is of a special character, with business limited to educational institutions and their employees ; (2) consideration of the circumstances which led to the adoption of the plan ; (3) a general explanation of the basis of the plan and of its mode of operation ; (4) some illustrations of the results which would have been obtained if this plan had been in operation in the past compared to the conventional type of deferred annuity with fixed payments, including consideration of the relative amounts of cash income realised, the relation of cash income to purchasing power and the extent of fluctuation in income under the “variable annuity” ; (5) reference to the possible use of such a plan by life insurance companies generally and of other means by which variable annuities of this type are being or may be provided.

Laws of Mortality Which Satisfy a Uniform Seniority Principle

1956 ◽  
Vol 82 (1) ◽  
pp. 114-122 ◽  
Author(s):  
T. N. E. Greville
Keyword(s):  
Interest Rate ◽  
General Class ◽  
The Other ◽  
Second Law ◽  
Life Annuity ◽  
Different Ages ◽  
The Difference

It is well known that a principle of uniform seniority applies to mortality tables which follow Gompertz's or Makeham's law, and, in a modified form, in the case of certain other laws, such as Makeham's second law and the double geometric law. It is natural to inquire what is the most general class of mortality laws to which such a principle applies. In its most general form the uniform seniority principle implies that the value of a joint-life annuity on m lives of different ages is equal to that of a joint-life annuity (possibly computed at a different interest rate) on k lives of equal age, in such a way that the new interest rate i′, the number of substituted lives k, and the difference between the youngest age and the substituted equal age, depend only on the various differences in age between the youngest life and the other original lives, and not on the actual age of the youngest life.

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