Biometric Risk Transfers in Life Annuities and Pension Products: A Survey
Each insurance and pension product can be interpreted as a package of guarantees and options, which determine risk transfers between the insurer or annuity provider on the one hand, and the insured or annuitant on the other. We address life annuities and pensions, in particular looking at possible transfers / sharing of biometric risks, i.e. risks related to the annuitant's lifetime and health status.
First, we focus on various arrangements which aim at building the post-retirement income, and involve either the accumulation phase, or the payout phase, or both. Various products are available on financial and insurance markets, each product with a specific guarantee structure (Conventional Life Annuities either immediate or deferred, Variable annuities, withdrawal plans, etc.). We then shift to a range of specific annuity products, stressing the relevant features: Advanced Life Delayed Annuity (ALDA), Ruin Contingent Life Annuity (RCLA), Variable Annuities (VA).
Finally, we focus on some arrangements for the payout phase: the Life Annuity with a Guarantee Period, the Value-Protected Life Annuity (that is, with "capital protection"), the Life Care Annuity, possible packaging LTC annuity and ALDA, Progressive Annuitization schemes, the Longevity-linked life annuities.