@article {Milevsky61, author = {Moshe A. Milevsky}, title = {Mortality Plateaus and the Pricing of Longevity Insurance}, volume = {2014}, number = {1}, pages = {61--69}, year = {2014}, publisher = {Institutional Investor Journals Umbrella}, abstract = {The article examines the implications{\textemdash}concerning the pricing of longevity insurance and life annuities{\textemdash}of a {\textquotedblleft}plateauing{\textquotedblright} in the instantaneous force of mortality (IFM) at advanced ages. Given the increasing popularity of Advanced Life Delayed Annuities (ALDAs, a.k.a. deferred income annuities) and today{\textquoteright}s low interest-rate environment, the present-value cost of misestimating the dynamics of late-life mortality can be substantial. The article also offers comments about the possibility of using ALDA prices to imply market expectations of mortality dynamics and plateaus in a manner similar to implied volatility in the options market. This has obvious implications for annuity buy-outs, buy-ins, and other forms of longevity risk transfer, as well the most pressing retirement problem for individuals{\textemdash}how to make their money last for the remainder of their lives.}, URL = {https://guides.pm-research.com/content/2014/1/61}, eprint = {https://guides.pm-research.com/content/2014/1/61.full.pdf}, journal = {Special Issues} }