Defined terms for the annuity market and lifetime income landscape.
Sequence of returns risk is the risk that the order of investment returns — not just their average — determines whether a portfolio subject to withdrawals sustains a planned income, with poor early returns causing disproportionate damage during drawdown.
The Shapley value is the rule, developed by Lloyd Shapley, that divides the gain from cooperation by giving each participant a share equal to their average contribution across all possible orderings in which the coalition could have been built up.
A single premium annuity is any annuity contract funded by a single lump-sum premium payment at issue, with no provision for subsequent premium contributions — the structural alternative to a flexible-premium annuity, which accepts premium contributions over an extended accumulation period.
