Longevity Swap

Definition:

A longevity swap is a derivative contract that offsets insurance companies' or pension funds' risks of their policyholders living longer than expected. Longevity swap is an insurance program for the financial institutes or funds. A third party (insurance company, for example) will insure the pension fund or annuity fund based on the current predicted life expectancy. If life expectancy increases dramatically, the insurance policy kicks in to cover the extra pay-outs.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Salomon Brothers World Equity Index (SBWEI)

A top-down, float capitalization-weighted index used to measure the performance of fixed-income and equity markets. It includes approximately 6000 companies in 22 countries.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio