L
Logarithm n Blues
Member
Hi Forum,
I'm hoping someone can help me with this point of confusion:
Course notes and materials for SP2 comment that annuities 'Can be sold to secondary market in some jurisdictions'. I imagine that the factor here is regulation and the implication is that this is not usually allowed.
However couldn't this be done using a combination of fairly vanilla products?
eg. a company who wanted to offer this could offer:
For an even more standard portfolio, it seems like we could use a very long term repayment loan packaged with a decreasing term policy. Maybe the companies involved could arrange to settle payments between themselves rather than paying the annuity and collecting the premiums from the policyholder?
I guess the main difference here is that the customer is involved in 3 contracts (instead of 0 contracts if surrender is allowed), but surely many customers would be happy with this?
I'm hoping someone can help me with this point of confusion:
Course notes and materials for SP2 comment that annuities 'Can be sold to secondary market in some jurisdictions'. I imagine that the factor here is regulation and the implication is that this is not usually allowed.
However couldn't this be done using a combination of fairly vanilla products?
eg. a company who wanted to offer this could offer:
-An interest only loan, that gives a lump sum on day one and charges regular interest payments (equal to the annuity payments) until repaid.
-A whole of life policy that can repay the loan on the death of the policyholder
This would effectively swap the regular payments for the lump sum.-A whole of life policy that can repay the loan on the death of the policyholder
For an even more standard portfolio, it seems like we could use a very long term repayment loan packaged with a decreasing term policy. Maybe the companies involved could arrange to settle payments between themselves rather than paying the annuity and collecting the premiums from the policyholder?
I guess the main difference here is that the customer is involved in 3 contracts (instead of 0 contracts if surrender is allowed), but surely many customers would be happy with this?