Description: This paper develops a model of annuity mortality that facilitates a more thorough evaluation of the issues of policyholder antiselection and insurance company response. Aging occurs as an annuitant's health state changes. Death occurs either as terminal health state or by accident. By knowing the current health state, the annuitant or insurance company can improve its knowledge about life expectancy.

Description: Enhanced or impaired annuities are life annuities underwritten to reflect annuitants' actual mortality. They are not currently prevalent in the U.S. or Canada, where life annuities assume low mortality and are thus unfair for impaired lives. This paper looks at the present annuity marketplace in the United States and Canada. It also reviews the underwriting and marketing of life annuities in the United Kingdom where “enhanced” life annuities are available for a broader cross section of the marketplace. It also reviews the use of P&C risk classification techniques and how they might apply to the annuity marketplace as well as potential legal constraints on broader risk classification for life annuities.

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: New Zealand is about to launch its first variable annuity with guaranteed lifetime withdrawal benefits. The product design is mindful of the lessons from the financial crisis in the United States, Europe and Japan.

Description: This article delves into a new line of statistical thinking of the author, that may be useful for product development actuaries. The key concept is how product design can produce products that diversify quickly, meaning that the company can be confident of a profitable product line, based on fewer sales than might be true for other designs.