Survival Insurance
Discussion
There is obviously a good market in Life insurance, which pays out when you die.
How about the opposite. A policy that pays out if you make it to a certain age?
For example I might find myself in a few years at 50, with enough savings / pension to probably make it comfortably to 80. But if I live beyond that I may have an tough time, depending on the stock market / housing market / health etc.
So I could see a product where you put a lump sum in at age 50 or at age X, then it pays out a annual amount if you make it to 80 or age Y. So a bit like an annuity, but one that is deferred.
Since the insurer would have the money for say 20-30 years before they pay out, and it's likely you'd not make it to the pay out I'd imagine if you did the monthly income could be quite high, much better then a traditional annuity.
Just interested if anything like this exists, or what a better plan would be to insure against living longer.
How about the opposite. A policy that pays out if you make it to a certain age?
For example I might find myself in a few years at 50, with enough savings / pension to probably make it comfortably to 80. But if I live beyond that I may have an tough time, depending on the stock market / housing market / health etc.
So I could see a product where you put a lump sum in at age 50 or at age X, then it pays out a annual amount if you make it to 80 or age Y. So a bit like an annuity, but one that is deferred.
Since the insurer would have the money for say 20-30 years before they pay out, and it's likely you'd not make it to the pay out I'd imagine if you did the monthly income could be quite high, much better then a traditional annuity.
Just interested if anything like this exists, or what a better plan would be to insure against living longer.
STURBO said:
There is obviously a good market in Life insurance, which pays out when you die.
How about the opposite. A policy that pays out if you make it to a certain age?
For example I might find myself in a few years at 50, with enough savings / pension to probably make it comfortably to 80. But if I live beyond that I may have an tough time, depending on the stock market / housing market / health etc.
So I could see a product where you put a lump sum in at age 50 or at age X, then it pays out a annual amount if you make it to 80 or age Y. So a bit like an annuity, but one that is deferred.
Yes, you can buy a deferred annuity.How about the opposite. A policy that pays out if you make it to a certain age?
For example I might find myself in a few years at 50, with enough savings / pension to probably make it comfortably to 80. But if I live beyond that I may have an tough time, depending on the stock market / housing market / health etc.
So I could see a product where you put a lump sum in at age 50 or at age X, then it pays out a annual amount if you make it to 80 or age Y. So a bit like an annuity, but one that is deferred.
But an insurer would be guaranteeing returns based on longevity (and interest rates) 30 years into the future for potentially an additional 20+ years, so it would be extremely expensive.
In effect, this is similar to a deferred pension from a final salary scheme - and we know how expensive they are to fund!
STURBO said:
Since the insurer would have the money for say 20-30 years before they pay out, and it's likely you'd not make it to the pay out I'd imagine if you did the monthly income could be quite high, much better then a traditional annuity.
Just interested if anything like this exists, or what a better plan would be to insure against living longer.
To be fair the probability of a 50-year old living to 80 is around 67% so I think you are significantly underestimating the payout probabilities!Just interested if anything like this exists, or what a better plan would be to insure against living longer.
STURBO said:
stuff
The sector already thought of something like this, worked out it was a great wheeze and marketed them.. as endowments. The problem was, the returns that the policies were predicated on were complete and utter b
ks*. If we assume then, that the need to hit the return is pretty critical, then the provider has to invest in instruments that off er higher certainty, but lower returns. With gilt yields being what they are at the moment, that makes such a product an expensive item. Which means it's not the greatest thing for you, given that cost control is vital, especially over the long term.- And if you're reading this, and were the shyster who saw me coming in 1987 in Limassol, keep running.
Thanks for the comments.
Sidicks: See where you are coming from with the longevity angle. Good to hear the probability is that high.
Ginge: Yes I can see it's a bit like an endowment, but with an endowment the provider paid out if you died, if I remember correctly.
I guess I could just delay buying a traditional annuity until I'm a lot older, and allow the funds to remain in a SIPP till then.
Sidicks: See where you are coming from with the longevity angle. Good to hear the probability is that high.
Ginge: Yes I can see it's a bit like an endowment, but with an endowment the provider paid out if you died, if I remember correctly.
I guess I could just delay buying a traditional annuity until I'm a lot older, and allow the funds to remain in a SIPP till then.
No-one wants to be the 1 person out of 15 (a guess not a stat) that will live to 100 but have to survive on cat food because their SIPP drawdown strategy proved sub-optimal....
I forecast the return of private tontines in one form or another. For example, you get together with 14 trusted friends (similar age + the type that won't kill you) and each put a decent amount in a pot, which is invested for capital growth. Half of the pot is shared between the remaining survivors at age 85, the other half at 95.
I forecast the return of private tontines in one form or another. For example, you get together with 14 trusted friends (similar age + the type that won't kill you) and each put a decent amount in a pot, which is invested for capital growth. Half of the pot is shared between the remaining survivors at age 85, the other half at 95.
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