Longevity risk is the possibility that current assessments of life expectancy are wrong. It is a growing issue for annuity writers and providers of pension finance and a developing asset class for hedge fund managers.
Longevity risk exists because of the increasing life expectancy trends among policyholders and pensioners. Even a small change in life expectancies can create severe solvency issues for pension plans and insurance companies. This can result in payout levels that are higher than what
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