Description: This paper applies the research in Prospect Theory of Kahneman and Tversky to explain why sales of annuities lag sales of life insurance products. The author theorizes that life insurance is easier to sell because customers perceive themselves to be in the domain of losses, while potential annuity customers perceive themselves to be in the domain of gains. Kahneman and Tversky showed us that people are mostly risk averse in the domain of gains and risk seeking in the domain of losses. Purchase of an annuity or life product is a risky investment. Customers will find it easier to take the risk in the life insurance domain of losses than the annuity domain of gains. The author then proposes a hybrid life annuity product that might address both mortality and longevity risk in one product that would allow both products to be more competitive than stand-alone products.

Description: An overview of the immediate payout annuity market.

Description: I recommend a Social Security deferral product, and two annuity enhancements. I then discuss the challenges faced in getting such products distributed.

Description: The article discusses PLR 201632004, which addresses the partial annuitization rules of IRC section 72(a)(2) in the context of a deferred income annuity rider attached to a variable deferred annuity contract.

Description: Summarizes IRS private letter ruling PLR 200818018, released Jan. 29, 2008, related to treatment of certain payments under Immediate VAs as SEPPs, and discusses its significance.

Description: This article offers issues and trends with immediate payout annuities.

Description: In the June 2014 issue of Product Matters, Doug Robbins of Pacific Life authored a fascinating article entitled “Velocity of Diversification.” Therein, he proposed a pricing measure that describes the “…speed at which confidence in profitability is attained”. How can stochastic modeling of mortality be applied to analyze the velocity of diversification, and how would that measure be affected by volatility in the underlying assumptions?

Description: Discussion about the pros and cons of providing lifetime income options in defined contribution plans, and about the pros and cons of annuitization vs. structured payouts. Discussion triggered by an SOA research report authored by Steve Vernon.

Description: This paper considers the risk that actual mortality will be lower than the mortality assumed when pricing life annuities on impaired lives. It develops a method for managing this risk through a Provision for Adverse Deviation PAD.

Description: Over the last several decades, mortality trends and life expectancies in developed countries have been improving and are expected to continue to improve in the future. This paper discusses issues of longevity risk and volatility faced by small defined-benefit DB pension plans in Canada and outlines the opportunities available for entrepreneurial insurance companies interested in providing solutions to address these issues.