Defined terms for the annuity market and lifetime income landscape.
The tontine versus annuity comparison is the structural comparison between a tontine — a direct pooled arrangement with visible redistribution and member governance — and a commercial annuity — an insurer-intermediated arrangement with invisible redistribution and insurer governance.
Total adjusted capital is the measure of an insurance carrier's available capital used as the numerator in the risk-based capital ratio, consisting of statutory surplus plus specified additions including the asset valuation reserve and other items prescribed by state insurance regulators.
A transfer-backed claim is a lifetime income claim in which the income is funded by an entity other than an insurance company's general account — typically a government program backed by taxing authority or an employer plan backed by plan assets and sponsor obligations.
Underwriting in the longevity context is the process by which an issuer of a lifetime income arrangement assesses each prospective participant's expected longevity through age, sex, health status, family history, and other factors, and assigns the participant to a priced risk class.
