Defined terms for the annuity market and lifetime income landscape.
Annuity payments are the periodic income amounts an insurer pays to the contract owner under an annuitized contract, scheduled at a fixed frequency — most commonly monthly — and continuing under terms specified in the contract, typically for the lifetime of the contract owner.
Annuity persistency is the rate at which annuity contracts remain in force over time without being surrendered, lapsed, annuitized into income, or otherwise terminated, typically measured as a percentage of contracts (or premium dollars) remaining in force at successive contract anniversaries.
The annuity puzzle is the observation that voluntary purchase of lifetime income annuities by retirees is much lower than standard economic theory predicts, given that annuitization should be broadly rational for individuals without strong bequest motives or other unusual circumstances.
An arithmetic mean is the ordinary average — the sum of a set of values divided by how many values there are.
