6. CRITICAL THINKING: The article on the next page addresses a key issue archived on the web site of the National Association of Insurance Commissioners (NAIC). Longevity risk exists due to the increasing life expectancy trends among policy holders and pensioners, and can result in payout levels that are higher than what a company or fund originally accounts for, and there are even academic/industry meetings centered around longevity risk.

a. What are the consequences, negative and/or positive, of increasing life expectancy for life insurance products?

b. What are the consequences, negative and/or positive, of increasing life expectancy for annuity products?

c. How should life insurance companies respond and plan for this continuing trend?