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Old 10-23-2002, 04:41 PM
Soonerguy Soonerguy is offline
Join Date: Oct 2002
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Default Fixed annuity pricing for non-actuary

I want to gain a deeper understanding of how fixed annuities are priced. I work in the third party distribution area but occasionally get involved in the product design/update process. What I am looking for is an information source that will describe various features and the implications for pricing. For example, everything else being equal, a nursing home waiver available after 30 days costs xx basis points in rate. Any help is appreciated.
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Old 10-23-2002, 07:05 PM
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Double High C Double High C is offline
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There is a Course 8I study note, "Life and Annuity Products and Features".

Among the products it mentions are fixed (i.e. nonvariable) deferred annuities (as well as "Income Annuities", i.e. SPIAs, variable annuities, and various life products).

Regarding Fixed Annuities, I forgot how many basis points they suggest for Medical waivers like the one you mention, but I think that it was able to be provided relatively cheaply, provided that the definitions / eligibility criteria are rigorously determined, and not highly subject to abuse.

Also, it mentioned things like Bailouts, which appear to be undervalued by the marketplace (at the time of the writing, anyway), based on the level of interest rate risk and surplus strain (e.g. due to higher reserves due to CARVM's treatment of "significant contingent surrender charges") attributable to them.

The more embedded options there are, the more important Interest Scenario Pricing is.
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