An Annuity’s ‘Moneyness’? There’s an App for That

April 27, 2021 by R. Michael Markham

Life insurance companies are using predictive analysis, derived from substantial insurer historical data, as the basis for modeling variable annuity owner behavior (OB). An important metric for predicting OB is the degree to which a contract is “in the money” (ITM). 

The insurer is concerned that when the liability (present value of the future estimated owner income) is substantially greater than the account value, the owner will elect the guaranteed income and the insurer would then be on the hook for the estimated difference. 

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Originally Posted at Retirement Income Journal on April 21, 2021 by R. Michael Markham.