Abstract:

Regular annuities provide payment for the duration of an owner's life-time. Period-Certain annuities provide additional payment after death to adesignated beneficiary provided the insured dies within a certain period after annuitization. It has been argued that the bequest option offered by the latter is dominated by life insurance which provides non-random bequests. This is correct if competitive annuity suppliers have full information about individual longevities and price annuities accordingly. In contrast, this paper shows that when individual longevities are private information, a competitive pooling equi-librium which offers annuities at common prices to all individuals may have positive amounts of both [...]

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