Discipline: Investing, Insurance
Life annuities continue to be important products, even more so now in a low interest rate environment. Annuities markets have seen huge innovation, with new ideas under development. The global trend away from defined-benefit pension plans to defined-contribution pension plans has emphasised the importance of annuities as a way of delivering pension income in a defined-contribution setting.
This book aims to provide the reader with answers to some fundamental questions regarding life annuities and post-retirement income. What is the individual longevity risk? What is an annuity? And what is a life annuity? Why and when should a life annuity be purchased? How should life annuity design be improved to enhance voluntary annuitisation?
Readers will understand the specificity of life annuity products with respect to other products sold by life insurance companies, from both the insurer’s and the annuitant’s perspectives. Pitacco highlights the mix of financial features (yield from investments, interest rate guarantee) and insurance features (protection against the individual longevity risk) that can be recognised in life annuity products. Numerical examples help in understanding significant features of life annuities.
The book is essential reading for all practitioners (actuaries, accountants, asset managers) in the field of life insurance and pensions. Students and lecturers in actuarial sciences, economics, business economics and finance will also benefit from reading this book.