Page 33 - Life Assurance

By pooling the risk of excessive longevity,
insurers can pay a lifetime income to annuitants
that cannot be outlived.

Annuitants tend to be healthy individuals
who generally live longer than most persons.
Because of the higher life expectancy of
annuitants, actuaries use special annuity tables
to calculate annuity premiums.

- Types of Annuities:

Insurers sell a wide variety of individual
annuities. For sake of convenience and
understanding, the major annuities sold to day
can be classified as follows:

1- Fixed annuity:

A fixed annuity pays periodic income
payments that are guaranteed and fixed in
amount. During the accumulation period prior to
retirement, premiums are credited with interest
there are typically two interest rates: a
guaranteed minimum interest rate and current
interest rate. The guaranteed rate is the
minimum interest rate that will be credited to the
fixed annuity; the current rate is based on
current market conditions. The current rate is
guaranteed only for a limited period typically
one to five years.

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