Question

B1. Should purchasers of single-premium immediate annuities receive the same annuity income regardless of their health? If an insurer decided to differentiate payments on the basis of health status, would healthier individuals receive more or less monthly income than unhealthy persons? Why? Do you think there would be a market for this type of annuity product? Why or why not?

B2. In your opinion, are annuities more like insurance or investments? Discuss the arguments that could be used to support each choice.

Answer 1

B1. To qualify for the higher payouts offered by medically underwritten SPIAs, you'll need to prove that your life expectancy is shorter than standard actuarial tables suggest.. It means healthier individuals will receive less payment than unhealthy persons because chances of payment for a long period of time is less in unhealthy person.

yes , there is market for this type of annuity product because of below reaons :-

1. Guaranteed Income

2,. Account Management or Maintenence charges are low or nil.

3. Plan for Retirement.

B2. Annuities are not investments, they are long-term policy contracts between you and an insurance company. It is just to secure your future with minimum risk.