longevity derivatives

Definition

Securities that offer protection to business people exposed to longevity risks, such as insurers and pension plan managers who pay more in derivatives when people live longer than expected. Longevity bonds were the first longevity derivatives. The bonds are based on the population's survivorship, and the payments drop as the mortality rate goes up. Options, swaps, and forward contracts also include longevity derivatives.
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longevity bond longevity insurance