Wednesday, September 26, 2007

Rewards of investing in a Life Annuity

A few people told me that they liked the article published in the Straits Times about the rewards of investing in a life annuity.

The original text of my article is posted here.
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4 comments:

Anonymous said...

Kin Lian,

I would like to point out your projection fallacy (i.e. simple projection based on past data). You might want to ask yourself the following:

1) What does your "population" data include?

2) How do new PRs and influx of foreigners who have dramatically different lifestyles and riches contaminate the data pool?

Based on your projection, there will come a day when 99% won't die.....when 99% will live to 500 years old!!

September 26, 2007 10:53 AM
Anonymous said...

I think Mr Tan is saying chances of people living longer now are higher and more so in future. Of course your projection of 500 years is absurd.
Predicting how long people will live is an inexact science but I think Mr Tan is using actuarial science which I as a layman (not a qualified actuary) think is reasonable. That is why insurance as a business can exist.

September 26, 2007 9:43 PM
Anonymous said...

To Anonymous,

Why is 500 years "absurd" when it is arrived at using the same "actuarial science" calculation???

The existence of insurance firms is not due to this projection of natural lifespan!!

September 27, 2007 11:10 AM
Tan Kin Lian said...

Based on the projection of improvement in mortality, it is possible, one day, that people may live to 500 years.

But this may occur in a few thousand years' time.

Some people think that the improvement in mortality will slow down after a certain stage. This is probably coorect.

But, the current rate of improvement is likely to continue for at least another 20 years, in my opinion.

October 06, 2007 3:26 PM

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