Longevity insurance - What are the Options?

The Straits Times published my article in their Review section on 21 September 2007.

I explained the increasing life expectancy and the high proportion of people that will survive to 85 and 95. This is higher than what most people think.

I estimated the cost at age 55 of buying the longevity insurance which pays $300 a month from age 85 for the rest of the lifetime, as follows:

                                       Male   Female
No increase, no refund                $6,818  $ 8,759
No increase, with refund              $9,824  $11,594 
Increase by 2% yearly, no refund     $15,137  $19,548
Increase by 2% yearly, with refund   $28,923  $32,991

With refund: the original sum is refunded (without interest) on death of annuitant
Increasing payout: the amount increase by 2% yearly from the time of purchase.

I recommend to buy the increasing annuity, with no refund for those who do not have any serious medical problem. For those who are in poor health, they should buy the increasing annuity with full refund.