Defined terms for the annuity market and lifetime income landscape.
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.
Lorenzo Tonti was the 17th-century Italian banker who proposed the pool-based lifetime income structure that bears his name, presented to French finance minister Cardinal Mazarin in 1653 as a mechanism for raising state funds.
Loss aversion is the tendency for individuals to weight losses more heavily than equivalent gains, so that avoiding a potential loss produces stronger motivation than pursuing a gain of the same size.
