Defined terms for the annuity market and lifetime income landscape.
A longevity bond is a fixed-income security whose payments depend on the realized mortality of a defined reference population, designed to transfer systematic longevity risk between counterparties in capital markets.
Longevity heterogeneity is the variation across individuals in expected lifespan that goes beyond what age and sex alone explain, reflecting differences in socioeconomic position, health status, geography, lifestyle, and other underlying factors.
Longevity risk is the risk that an individual or a population will live longer than expected, with consequences for the adequacy of lifetime income, the reserves of insurers, and the funding of pension and social-insurance arrangements.
Longevity tail risk is the risk concentrated in the right tail of the lifespan distribution — the relatively small probability that any specific individual lives to very advanced ages, where the cost of providing income is highest.
Morbidity risk is the risk of disease and disability across the lifespan — the complement to mortality risk in characterizing the total health-related exposure an individual faces.
