Glossary

Lapse rate is the percentage of annuity contracts in a given cohort that terminate before maturity in a given period, typically expressed as an annual rate and tracked by contract year because lapse behavior changes systematically as the contract ages.

A legacy block is a closed group of in-force insurance or annuity contracts administered until their natural termination, with no new contracts added to the block, typically arising from a discontinued product line or from contracts transferred to a different carrier through reinsurance or sale.

Liability-driven investing is an investment philosophy in which the structure and composition of an asset portfolio is set primarily by reference to the obligations the portfolio must fund, rather than by reference to a market index or an absolute return target taken in isolation.

A life annuity is an annuity that pays income for as long as the contract owner lives, with payments ceasing at death unless a guarantee period or survivor provision is elected. Why it matters The life annuity is the structure that delivers the pure longevity-pooling benefit: income that continues for life regardless of how long that life lasts. It is the arrangement against which features that modify the pure structure — period certain, joint life, refund provisions — are underst

Life expectancy is the average number of additional years a person of a specified age is expected to live, calculated from a mortality table representing either current mortality rates or projected future rates.