Considering annuities

DullGreyGuy

dunroving said:

Hoenir said:

dunroving said:

Personally, for a life annuity it would really annoy me to think of the annuity company being quids-in if I died early in the annuity period. 

The pooled risk enhances the return for those that live on.  Cake and eat it. Alternatively buy shares in the annuity providers thmselves. 

More people spend their lifetimes insuring their property against the risk of fire. 

I understand it is ostensibly a form of insurance, and the concept of pooled risk. The add-on of a guaranteed period is also a form of insurance or risk mitigation - so clearly the insurance companies recognise the concern of some potential customers of dropping dead within months of an annuity starting. 

No, it is a form of insurance, not just ostensibly so. 

Guarantee is just a product feature that you can choose to have or not, like if you want accidental damage cover on your Home insurance or not. 

Anyone who writes annuities will be in the bulk annuity market, but not everyone who does bulk annuities offers individual annuities. As the pensioner cannot be disadvantaged by their pension scheme going through the regular buy-out process annuity providers need to be able to mirror the features that pension schemes offered such as guarantee periods. If you've built the tech to be able to do it with Bulks you may as well offer it to your individual annuitants too and maximise your portfolio. 

Cobbler_tone said:

I wonder how many people wouldn’t choose to insure their car (and those around them) if it wasn’t the law?

Well you could look at other non-compulsory insurance like Home or Pet or Travel? 

According to various research 65-75% of people have home insurance of some form so somewhere between a third and a quarter dont for whatever reason.  Look at Travel insurance and its more like 50/50 

I've always found it a little odd that people feel that money spent on insurance is "wasted" whereas they dont feel the same way about a fire extinguisher or blanket etc which are equally there for emergency only

MeteredOut

DullGreyGuy said:

dunroving said:

Hoenir said:

dunroving said:

Personally, for a life annuity it would really annoy me to think of the annuity company being quids-in if I died early in the annuity period. 

The pooled risk enhances the return for those that live on.  Cake and eat it. Alternatively buy shares in the annuity providers thmselves. 

More people spend their lifetimes insuring their property against the risk of fire. 

I understand it is ostensibly a form of insurance, and the concept of pooled risk. The add-on of a guaranteed period is also a form of insurance or risk mitigation - so clearly the insurance companies recognise the concern of some potential customers of dropping dead within months of an annuity starting. 

No, it is a form of insurance, not just ostensibly so. 

Guarantee is just a product feature that you can choose to have or not, like if you want accidental damage cover on your Home insurance or not. 

Anyone who writes annuities will be in the bulk annuity market, but not everyone who does bulk annuities offers individual annuities. As the pensioner cannot be disadvantaged by their pension scheme going through the regular buy-out process annuity providers need to be able to mirror the features that pension schemes offered such as guarantee periods. If you've built the tech to be able to do it with Bulks you may as well offer it to your individual annuitants too and maximise your portfolio. 

Cobbler_tone said:

I wonder how many people wouldn’t choose to insure their car (and those around them) if it wasn’t the law?

Well you could look at other non-compulsory insurance like Home or Pet or Travel? 

According to various research 65-75% of people have home insurance of some form so somewhere between a third and a quarter dont for whatever reason.  Look at Travel insurance and its more like 50/50 

I've always found it a little odd that people feel that money spent on insurance is "wasted" whereas they dont feel the same way about a fire extinguisher or blanket etc which are equally there for emergency only

Because psychology. The latter two are physical things that people can see and touch; they don't expire after a year like insurance policies typically do (although I think fire extinguishers do have a shelf-life).

So, even if they never use them, they always have them.

westv

We all love the risk transfer mechanism.