From “benefits” to “guarantees”: looking at life insurance products in a new framework

Ermanno Pitacco

Many modern insurance products are designed as packages, whose items may be either included or not in the product actually purchased by the client.

For example: the endowment insurance which can include various rider benefits and options, the Universal Life insurance, the Variable Annuities, the presence of possible LTC benefits in pension products. The benefits provided by these products imply a wide range of "guarantees" and hence risks borne by the insurance company (or the pension fund). Guarantees and inherent risks clearly emerge in recent scenarios, in particular because of volatility in the financial markets and trends in mortality / longevity.