Longevity Insurance — A Reader’s Guide

Important notice

This guide is a plain-English summary of a technical research paper written for practitioners and regulators. It is consumer information, not personal financial advice. Nothing in this guide should be taken as a recommendation to buy, sell, or continue any financial product. Life insurance and pension decisions depend on personal circumstances and should be discussed with a qualified adviser regulated by the Central Bank of Ireland.

The product this guide describes does not exist in the Irish market today. The paper's central finding is that the design examined cannot be brought to market on a commercially and prudentially viable basis under the current Solvency II standard formula. The guide explains what the product would have been, what the paper found, and why the finding matters.

About this edition

Paper MWP-2026-04 was originally released at v1.0 on 01 July 2026 as a positive-thesis pricing paper. Between v1.0 and v1.1.1 the paper was subjected to a full independent audit and fact-check pass; the audit and fact-check work uncovered a material Solvency-II-coverage viability failure that had not been in scope of the v1.0 release. The v1.1.1 edition documents that failure in full arithmetic detail and re-classifies the paper as an adverse-finding paper.

This Reader's Guide is a fresh document for v1.1.1. The earlier v1.0 Reader's Guide is superseded and should not be relied on for its numbers or conclusions.

Reader's Guide v1.1.2 (07 July 2026) extends the v1.1.1 Reader's Guide (06 July 2026) with a fuller treatment of §10 — the forward-look — reflecting the design directions and structural questions recorded in paper §9.4, §12.4, and §12.5. The v1.1.1 paper text itself is unchanged; the Guide has been broadened to match the paper's own forward-look material more closely. No numbers, findings, or classifications have moved.

Contents

1. What this paper is about
2. Why this product was designed
3. How the product would have worked, step by step
4. The four commission models
5. The reference example — pricing without reserving
6. The headline pricing panel
7. The regulatory picture in plain English
8. The Article 138 finding — the longevity capital shortfall
9. The SCR-coverage finding — the viability failure
10. The forward-look — what could change the conclusion
11. Who this kind of product might have suited — and who it would not
12. The disclosure framework
13. A checklist for the informed reader
14. Frequently asked questions
15. Glossary of terms
16. About the author
17. About this paper

At a glance — the v1.1.1 headline

• The paper describes a regular-premium deferred whole-of-life annuity held inside an Approved Retirement Fund (ARF) or vested Personal Retirement Savings Account (PRSA), branded and priced as longevity insurance. Term assurance pays if you die early; this design would have paid a lifetime income if you survived to a chosen vesting age.
• The paper prices the product across every combination of entry age 60–75 and vesting age 75–90 using standard-formula Solvency II techniques, on the EIOPA EUR risk-free curve at 31 May 2026.
• The reference pricing example (entry age 65, vesting age 85, target income €1,000 per month, 20-year accumulation) requires a monthly premium of about €248 under the heaped-and-trail default commission model.
• The paper's central reserving case (entry 65, vesting 80, €400,000 fund, 4.0% payout for a €16,000-per-year CPI-indexed lifetime income) prices at €11,196 per year on the mutualised basis.
• The paper's first regulatory finding is that the Article 138 longevity stress is inadequate for entry ages 60–65 across every vesting age from 75 to 90 — the standard-formula capital requirement is roughly 69% to 71% of what a Cairns–Blake–Dowd 99.5% stochastic stress would demand.
• The paper's overriding finding is adverse. At the priced product without additional capital, Solvency II coverage stands at about 129% at issue but falls to 43% by year 5 of the accumulation phase and to deeply negative territory thereafter. The design cannot be brought to market on the standard-formula basis without a very large Day-1 own-funds injection.
• The Day-1 own-funds level that would restore full SCR coverage while preserving fair consumer value — Money's Worth Ratio at 0.90, premium below 50% of the ARF fund, unsecured drawdown beaten at age 95 — is approximately €168,000 per policy, or €168 million on a 1,000-policy book. The paper labels this capital footprint as prohibitive at Irish market scale for all but the two or three largest life offices.
• The paper is presented as an adverse-finding paper. It documents the negative viability outcome in full and identifies, in §12, the forward-looking design directions that could change the conclusion in a future paper. It does not itself pursue those directions.

1. What this paper is about

The technical paper MWP-2026-04 defines a life-insurance product that most Irish consumers have never seen advertised, because no Irish insurer currently sells one. The product is a regular-premium deferred whole-of-life annuity. Broken into its parts:

• Regular-premium — you would pay a monthly premium for a fixed accumulation period, in the same way you would pay for a term-assurance policy.
• Deferred — no income would be paid during the premium-paying period. Income would only start at a chosen vesting date.
• Whole-of-life annuity — once income started, it would be paid every month for as long as you lived. There is no fixed end date.

The paper calls this "the structural inverse of term assurance". A term-assurance policy is a bet that you might die inside a fixed term; if you do, your family receives a lump sum. This design is the opposite: it is a bet that you might survive to an advanced age; if you do, you receive a lifetime income.

The paper is a working paper, not a product prospectus. It sets out the specification, prices it under actuarially defensible assumptions, reserves it under Solvency II, examines the legal and regulatory framework, and — the material output of the v1.1.1 edition — reports that the standard-formula reserving analysis does not support commercial viability of the design as specified.

2. Why this product was designed

Since 1999, Irish law has allowed pension savers to keep their retirement funds invested through an Approved Retirement Fund (ARF) or, more recently, a vested Personal Retirement Savings Account (PRSA), instead of buying a traditional lifetime annuity from an insurer. This reform gave savers freedom and control — but it also transferred a risk that used to be the insurer's problem onto the individual: the risk of living too long.

Modern Irish mortality tables show, in blunt terms, that:

• A healthy 65-year-old Irish male has about a one-in-three chance of reaching age 90.
• A healthy 65-year-old Irish male has about a one-in-ten chance of reaching age 95.
• Female probabilities are materially higher.

An ARF drawing 4% of the opening balance each year — a common heuristic — has a real, non-zero probability of running out of money before its owner runs out of life. The arithmetic does not work reliably at current EUR interest rates over a 30-year horizon.

Immediate annuities — the traditional insurance solution — address a related but different problem: guaranteed income starting now, at rates set by today's bond yields. That trade often looks unattractive to a 65-year-old with a healthy fund balance.

The gap is at the tail. What has not been available in Ireland is a product that would let a saver pay a modest regular premium in their sixties and seventies, secure a guaranteed lifetime income starting in their eighties, and keep control of their ARF or PRSA in the meantime. That gap is the problem the paper set out to address.

The paper's finding is that closing this gap with the design examined, under current Solvency II rules, is not commercially viable. The gap remains open. §12 of the paper identifies the design directions that could close it in a future workstream.

3. How the product would have worked, step by step

The design operates in four phases, in the following order:

Phase 1 — Application and underwriting. The consumer applies to the insurer through a regulated adviser and discloses medical and lifestyle information as for any life-insurance policy. The insurer assigns an underwriting tier reflecting health at the time of application.

Phase 2 — Accumulation. From the policy start date until the vesting date, the consumer pays a monthly premium. Premiums are paid out of the ARF or vested PRSA, so they are made from pension assets rather than after-tax personal cash. No income is paid to the consumer during this phase. The premium is fixed at outset for the whole accumulation period.

Phase 3 — Vesting. At the vesting date — chosen at outset from ages 75 to 90 — the accumulation phase ends. Premiums stop. Income begins.

Phase 4 — Income for life. From the vesting date onward, the insurer pays a fixed monthly income for as long as the consumer lives. There is no maximum age, no residual value on death, and no ability to commute the remaining income for a lump sum. In the paper's central reserving case, the income is level in nominal terms and CPI-indexed at 2.5% per year to preserve real purchasing power. The product is single-life; there is no dependant's benefit.

The design is deliberately austere. Every feature that would add cost or complexity has been removed unless essential to the product's purpose.

4. The four commission models

Financial products in Ireland can be sold under several different commission structures, each of which affects the cost of the product to the consumer. The paper prices the product under four models in parallel so that the effect of commission choice is visible on every worked example.

The four models are:

Heaped and trail (the paper's default). The insurer pays the adviser 100% of the first year's premium up front, plus 5% of every premium thereafter. This is the closest analogue to how term-assurance policies are typically remunerated in the Irish market.

Zero commission. No commission is paid. The consumer pays the adviser directly on a fee basis, or the product is sold through an execution-only or fee-based channel.

Level 20%. The adviser receives 20% of every premium, in every year. This is a comparator model rather than a common market practice.

Industry reference (100/20/3). 100% in year 1, 20% in years 2 through 4, then 3% from year 5 onward. Drawn from broader European life-insurance commission practice.

The paper prices every entry-age and vesting-age combination under all four models so that consumers, advisers, and regulators can see the cost differential directly.

5. The reference pricing example — pricing without reserving

The paper's canonical pricing example is a healthy 65-year-old, non-smoker, applying for €1,000 per month of guaranteed lifetime income starting at age 85. The accumulation period is 20 years.

Under each commission model, the monthly premium is:

The reference-cell premium is €248 per month. Over 20 years of accumulation, that is a total premium payment of about €59,500. In exchange, the design would deliver €12,000 per year for life from age 85 onward.

Important — the pricing does not tell the whole story. The premium above is the price the actuarial model would produce for a policyholder. It is not the price at which the product could be sustainably written by an insurer under the Solvency II standard formula. That question is addressed in §9 below.

What the pricing means in plain terms. For a healthy 65-year-old, paying about €250 per month for 20 years would secure a €1,000-per-month lifetime income from age 85, if the product were available and viable. Payment ceases at death; there is no death benefit before vesting. The economic bet is straightforward: you would be paying to insure the risk of living into your late eighties, nineties, or beyond.

6. The headline pricing panel

The paper reports monthly premiums across a 7-row × 4-column headline panel — seven representative entry-age and vesting-age combinations at fixed target income (€1,000/month) and four commission models on the reference cell. The full 16 × 16 pricing surface is in Annex B of the technical paper. A plain-English selection from the heaped-and-trail default column:

• Entry 60, vesting 75, income €1,000/month: heaped-and-trail monthly premium about €713.
• Entry 65, vesting 85, income €1,000/month: heaped-and-trail monthly premium €248.
• Entry 70, vesting 85, income €1,000/month: heaped-and-trail monthly premium about €358.
• Entry 75, vesting 85, income €1,000/month: heaped-and-trail monthly premium about €612.

Two patterns emerge:

Later vesting age reduces premium sharply. For a 65-year-old, extending the vesting age from 75 to 85 cuts the monthly premium from about €1,197 to about €248 — an 80% reduction. The longer the deferral, the less mortality the insurer expects to pay out in aggregate.

Zero commission delivers meaningful savings. Across the shown cells the zero-commission premium is roughly 12–17% below the heaped-and-trail equivalent, with the spread widening at older entry ages. On the reference cell, this is €217.87 vs €248.01 — a €30 monthly saving, about €7,200 over the 20-year accumulation.

7. The regulatory picture in plain English

Life-insurance products in Ireland are governed by six overlapping regulatory regimes. The paper examines each in turn and finds no hard impediment to bringing this product to market — but it also finds that the prudential framework, under the current Solvency II standard formula, does not support commercial viability of the design examined.

The six regimes are:

Solvency II. The prudential regime for European insurers. Sets capital requirements. The product falls within existing lines of business; no new authorisation category is needed. The paper's material findings sit inside this regime — see §8 and §9 below.

Consumer Protection Code 2025 (CPC 2025). The Central Bank of Ireland's rulebook for how insurance is sold to consumers. The product is compatible; the standard suitability and information requirements apply.

Insurance Distribution Directive (IDD). European directive transposed into Irish law. Requires that any insurance-based investment product be sold with a formal target-market determination and a product-approval process. Applies.

PRIIPs Regulation. Requires a standardised Key Information Document (KID) for packaged investment products. The paper flags that the KID's three-scenario performance illustration format does not fit a lifetime-annuity structure cleanly, and recommends EIOPA engagement before any launch.

Pensions Act 1990 and IORP II. Because premiums are paid from an ARF or vested PRSA, occupational-pensions law and the Pensions Authority's trustee guidance apply to the assets. Standard.

Revenue tax rules. The Taxes Consolidation Act 1997 governs the tax treatment of pensions and ARFs. Careful drafting is required to secure Revenue approval for how premiums are treated for imputed-distribution purposes.

None of the six regimes contains a launch-blocking provision. The blocker is prudential, not regulatory — see §9.

8. The Article 138 finding — the longevity capital shortfall

This is the paper's first technical finding. It is a shortfall in the capital that the standard-formula Solvency II rules would require the insurer to hold against longevity risk.

Under Solvency II, an insurer must hold capital against the risk that policyholders live longer than expected. The standard-formula capital requirement for this risk is set out in Article 138 of Commission Delegated Regulation (EU) 2015/35. The article prescribes a specific stress test: reduce every mortality rate by a permanent 20%, revalue the liabilities, and hold capital equal to the loss.

The paper cross-checks this Article 138 stress against a Cairns–Blake–Dowd (CBD) stochastic mortality model — a well-established two-factor mortality-projection model — calibrated to the 99.5% percentile. The CBD 99.5% stress represents the mortality trajectory that only 0.5% of simulations exceed. This is the statistical meaning of a 99.5% one-year value-at-risk, which is the calibration standard Solvency II targets for all other risk sub-modules.

The two stresses do not agree. Across every entry age from 60 to 65, at every vesting age from 75 to 90, the Article 138 stress is approximately 69% to 71% of the CBD 99.5% stress. At the reference cell, the ratio is about 0.70. The standard-formula stress understates the statistically calibrated one by roughly one-third.

The paper labels this range "inadequate" because the shortfall is material and consistent across the commercially relevant part of the surface. The paper notes that the marginal band at vesting ages 75–95 for entry ages older than 65 reaches values as high as 0.9006 (at the 75/80 corner) — narrowing but not closing the gap.

Why does this matter to a consumer? In the short run, it does not affect the premium quoted, because Article 138 is what the insurer is required to hold. In the longer run, it matters because if this finding is reproduced by EIOPA or other researchers, it could change how much capital insurers are required to hold against this class of product — which affects what insurers are willing to offer, and at what price.

The paper's Annex A sets out the full stochastic mortality basis in eight fan-charts and a detailed model comparison. Annex A is an actuarial document; this Reader's Guide reports only the headline finding.

9. The SCR-coverage finding — the viability failure

This is the paper's material finding, and the reason v1.1.1 is classified as an adverse-finding paper. Read carefully.

The Article 138 finding above is about the amount of capital that should be held. This finding is about the ability of the insurer to hold it, over the run-off life of the product.

Solvency II requires an insurer to maintain Own Funds — its Solvency-II-approved eligible capital — at or above the Solvency Capital Requirement (SCR) at all times. Own Funds ÷ SCR is the coverage ratio; it must be at least 100%. The paper models the coverage ratio at five valuation dates over the product's run-off life:

• Year 0 (at issue)
• Year 5 of the accumulation phase
• Year 10 of the accumulation phase
• At vesting (year 15 in the central case: entry 65, vesting 80)
• Five years after vesting

On the priced product without any additional capital support, the coverage trajectory is:

Coverage collapses within the deferral period. The mechanism is a structural collapse of Own Funds — not growth in the SCR itself. Premium income ceases at vesting, but the longevity liability continues to run off for another two to three decades. The Day-1 loading buffer is consumed during the deferral period funding acquisition and maintenance costs, and there is no premium income after vesting to replenish it.

Longevity reinsurance does not repair the problem. The paper tested whether a full-cession post-vesting longevity swap at industry-standard reinsurance pricing (8% to 12% of ceded reserves) would restore viability. It does not. Reinsurance addresses the SCR denominator — the capital requirement — which is not the primary problem. The primary problem is the numerator — Own Funds.

How much capital would fix it? The paper constructs a joint frontier across two levers: the Day-1 own-funds injection the writing office would put behind the product (per policy), and the loading uplift on top of the €11,195.72 central premium. The frontier identifies combinations that achieve SCR coverage ≥ 100% at every one of the five valuation dates, while preserving fair consumer value against four specific tests:

• Money's Worth Ratio at least 0.90
• Total premiums no more than 50% of the ARF fund at outset
• Real income at age 95 above what an unsecured ARF drawdown would deliver
• Consistent with the Prisma multi-asset return sensitivity band

At the point on the frontier where all four consumer-fairness tests are satisfied and the MWR binds exactly at 0.90, the required Day-1 own funds are approximately €168,000 per policy, with premium loading uplifted by 9.4% relative to the standalone price. That is a €168 million capital footprint on a 1,000-policy book.

Why the finding is adverse. A €168m per-thousand-policies capital footprint is prohibitive for all but the two or three largest Irish life offices, and prohibitive at that scale for a product line that would compete for balance-sheet capacity with the writing office's existing profitable business lines. The MWR-at-floor result means the two constraints — Solvency II viability and fair consumer value — are, on this specific design, mutually incompatible. The lever of higher premium loading is closed: any further uplift breaches consumer fairness at the MWR floor. The lever of Day-1 own-funds injection is open, but the required magnitude is beyond commercial reach.

The paper's finding is therefore: the design examined cannot be brought to the Irish market on the terms specified, in the current-rules Solvency II environment, at a price that a reasonable consumer would accept as fair value.

10. The forward-look — what could change the conclusion

The paper's §12 identifies the design directions under which a longevity-insurance product for the Irish ARF and vested-PRSA market might, in a future paper, become viable. None of these directions is examined in the v1.1.1 paper. Each is a substantive piece of subsequent work.

10.1 Design directions considered and deferred

• Fund-linked payouts that share investment risk with the policyholder and reduce the run-off liability the writing office holds against its own capital. Such a design would move the product's regulatory classification closer to a with-profits or unit-linked annuity, and would require the consumer-fairness architecture (Money's Worth Ratio, Test C) to be rebuilt from scratch. Deferred to a separate paper.
• Cash-out or commutation options at vesting that reduce the post-vesting tail exposure. The mutualisation dividend the pooled design relies on depends on non-electing policyholders forfeiting on death or lapse; a cash-out at vesting would have to be priced so that electing policyholders do not extract subsidy from the non-electing pool. Not a trivial pricing problem; deferred.
• Reinsurance-integrated pricing structures under which the reinsurer participates in the accumulation-phase economics rather than only the tail. This requires a co-committed reinsurance counterparty on terms that could be underwritten into the base pricing model from inception rather than as a post-hoc overlay. To be revisited when a specific reinsurer engagement is in prospect.
• Age-anti-selection design tightening. The mutualised design as written treats entry age and vest age as substantially independent inputs. Tightening the design to link vest age more closely to entry age — for example, requiring vest age = entry age + 15 — would reduce anti-selection exposure by preventing late-entry/early-vest selection patterns. The anti-selection dividend needs to exceed the flexibility cost imposed on legitimate use cases. A design-choice question for a subsequent iteration rather than a modelling gap.
• Stochastic ARF-drawdown modelling in Test C. The Test C machinery in §7 of the paper uses deterministic constant-return paths for the ARF-only comparators. A stochastic ARF projection — modelling sequence-of-returns risk, particularly the risk of a negative early-drawdown-phase return path — would strengthen but not change the Test C conclusion. A stochastic Test C would pass by a larger margin than the deterministic Test C already does. Deferred because the finding is not consumer-fairness-limited.
• Broader Solvency II capital-relief structures. Sidecar structures, matching-adjustment portfolios, whole-book reinsurance quota shares, and capital-relief transactions with pension consolidators are all mechanisms by which longevity-risk-heavy back-books have been capitalised on European insurance balance sheets over the last decade. Each requires a specific counterparty structure and a specific asset-liability profile that this paper's design does not, at present, contemplate. Available in principle; each belongs to a corporate-treasury and reinsurance-broking exercise rather than a product-design paper.
• The Solvency II 2020 Review — codified in Delegated Regulation (EU) 2026/269 and effective 30 January 2027 — which reduces the risk-margin cost-of-capital rate from 6.0% to 4.75% and refines the volatility-adjustment mechanic. Article 138 itself is unchanged in this reform. Applied to the paper's central case, the reform reduces the required Day-1 own-funds injection at the fairness-viable frontier from about €168,000 per policy to about €145,000 to €155,000 per policy — a meaningful reduction, but not one that closes the gap for the specific design examined.
• A domestic or European longevity-reinsurance market of scale, absent at present in the specific form the mutualised design would call for.
• Cross-market or cross-jurisdictional pooling structures that reduce isolated longevity concentration.

10.2 Structural questions the paper leaves open

Beyond individual design directions, the paper's §12.5 records three broader structural questions that the v1.1.1 paper does not answer and should not be read as answering. Each is on record for a future paper, a supervisory dialogue, or a policy conversation, not for this Reader's Guide to resolve.

Is the current-rules standard formula well-calibrated for this product shape? The §6.3 finding that Article 138 systematically understates a Cairns–Blake–Dowd 99.5% internal cross-check by 28.7 to 30.7 percentage points at entry ages 60–65 suggests that the standard formula is not well-adapted to the longevity-risk profile of a regular-premium deferred whole-of-life annuity. Whether a bespoke internal-model or partial-internal-model treatment under Articles 100 to 127 of Directive 2009/138/EC would produce a different verdict is not within this paper's scope. The paper flags this as a legitimate question for a Central Bank of Ireland Own Risk and Solvency Assessment supervisory dialogue.

Could an Irish market-wide capital-provisioning structure bear risk no single office can? The wholesale longevity-swap market is real and increasingly deep for UK and continental European bulk-annuity business. Whether an equivalent structure — through a single reinsurance counterparty, a syndicate of reinsurers, or an industry-mutual capital vehicle — could be brought to bear on a novel Irish deferred-annuity book is a corporate-treasury and reinsurance-broking question this paper does not attempt.

Does the Irish state have a role in the capital provisioning of a longevity-insurance market? In several European jurisdictions the state has, in various forms, either provided capital-backing for longevity-insurance products (e.g. the French PER framework, the Belgian pension supplementary regime) or provided regulatory concessions that reduce private-office capital requirements (e.g. UK Solvency II reform proposals for the bulk-annuity market). Whether an Irish state-backed capital structure could bring a product of this shape within reach of an Irish life-office balance sheet is a policy question. The paper takes no position on it. It notes only that the negative finding of §6.6 and §7 is the kind of finding that, in other jurisdictions, has been the trigger for exactly this class of state-backed intervention.

10.3 State-level policy options recorded in paper §9.4

If a state role in longevity-insurance capital provisioning were to be contemplated by Irish policymakers, the paper records — without advocating any of them — three specific structural options that are within technical reach:

• An Ireland Strategic Investment Fund longevity-risk capital allocation. ISIF's Sustainable and Responsible Investment mandate permits allocations to Irish social-purpose investments. A capital allocation to a longevity-insurance vehicle, as risk-bearing capital rather than return-seeking capital, would sit within the ISIF mandate on plausible readings, subject to appropriate governance and risk-management structure.
• A Pensions Authority-sponsored mutual longevity structure. A pooled longevity vehicle sitting outside the Solvency II undertaking framework — as a statutory mutual or a designated occupational pooling structure under a bespoke Pensions Act amendment — would in principle be able to write the product without carrying the Article 142 SCR component on a single-office balance sheet.
• A state-guaranteed reinsurance backstop. A state guarantee on the tail-longevity risk at durations beyond, say, year 15 would displace the Article 189 default-proxy treatment of the reinsurance recoverable and would meaningfully reduce the writing-office SCR without introducing new counterparty-default drag on Own Funds. The scale of the required guarantee — in the region of €100 million to €150 million per 1,000-policy shortfall at the fairness-viable frontier — is within reach of state-level contingent-liability structures, but is not a small commitment.

The paper does not advocate any of the three. It records that some form of capital-provisioning structure beyond the single-office balance sheet appears necessary on the evidence developed, if a longevity-insurance product line comparable to those available in other European markets is to be available in Ireland during the period in which current-rules Solvency II, or DR 2026/269-amended Solvency II, remains in force.

The purpose of the v1.1.1 paper is to establish the finding for the design examined and to place these design directions and structural questions on record for whoever takes the next step.

11. Who this kind of product might have suited — and who it would not

Although the design examined is not commercially viable on the paper's finding, the underlying consumer need is real. If a future paper were to identify a viable variant, the target profile would be broadly as follows.

A viable variant might suit someone who:

• Is between 60 and 75, in good health, and has ruled out a full immediate annuity.
• Holds an ARF or vested PRSA of sufficient size that regular premium payments do not compromise their income needs in their sixties and seventies.
• Has a documented family history of longevity or a specific concern about surviving into their late eighties, nineties, or beyond.
• Understands and accepts that if they die before the vesting date, no death benefit is paid.
• Prefers a level or CPI-indexed lifetime income to a variable ARF-drawdown outcome for the tail years.

A viable variant would not suit someone who:

• Does not have a pension fund from which to pay the premiums, and would need to fund them from after-tax cash.
• Has a materially reduced life expectancy.
• Wants the ability to leave residual pension assets to dependants.
• Wants explicit inflation protection beyond CPI (for example, a wage-indexed income).
• Does not have a stable ARF or PRSA administrator prepared to make regular premium payments to an external insurer.

In every case, the decision would require personalised advice from a regulated financial adviser who has reviewed the consumer's full financial position. This guide cannot make that decision for anyone.

12. The disclosure framework

If a product of this class were ever brought to market, it would be sold with a formal disclosure pack consisting of at least the following documents:

• A Key Information Document (KID) under the PRIIPs Regulation — a three-page standardised summary of the product's costs, risks, and performance scenarios.
• A Product Information Document (PID) — a longer, insurer-specific brochure describing the product mechanics.
• A Statement of Suitability — a personal letter from the adviser explaining, in writing, why the product is suitable for the specific consumer.
• A Terms and Conditions booklet — the policy contract itself.
• A Reasons Why letter — the adviser's explanation, required under IDD and CPC 2025.

The paper flags a specific concern with the PRIIPs KID: the standard three-scenario performance illustration does not fit a lifetime-annuity structure. A KID scenario shows an investment return over one, five, and ten years. A whole-of-life annuity does not have a return; it has an income stream that continues until death. The paper recommends that any manufacturer engage EIOPA on how to present KID performance for this class of product before launch.

13. A checklist for the informed reader

If you are reading this guide because you were interested in this product as a consumer, the finding is that it is not available and, on the design examined, is not viable. If a future paper identifies a viable variant, the following checklist would apply.

• I have read the full technical paper (MWP-2026-04 v1.1.1) or a summary I trust.
• I understand that the v1.1.1 paper is an adverse-finding paper — the specific design examined is not commercially viable.
• I have obtained an independent, up-to-date valuation of my ARF or vested PRSA.
• I have discussed my longevity assumptions with my family and, if possible, my GP.
• I have consulted a Central Bank regulated adviser authorised to advise on both insurance and pension products.
• The adviser has explained the four commission models and I understand which one applies to any specific quote.
• I understand that if I die before the vesting date, no death benefit is paid.
• I understand what "level income" and "CPI-indexed income" mean, and which one applies to any specific quote.
• I understand that once income starts, I cannot commute or surrender the policy for a lump sum.
• I have received a written Statement of Suitability tailored to my personal circumstances.
• I have considered at least one alternative — full immediate annuity at vesting, or maintained ARF drawdown — for comparison.

14. Frequently asked questions

Q. Is this product available to buy today in Ireland? A. No. This is a research paper describing a product design. No Irish insurer currently sells such a product, and the v1.1.1 paper's finding is that the specific design examined is not commercially viable on the standard-formula Solvency II basis at prices a reasonable consumer would accept as fair value.

Q. If the paper's finding is adverse, why has the paper been published? A. Adverse findings are as important as positive ones. The paper documents in full arithmetic detail why the design does not work, so that a future workstream — by Mylife.ie or by any other researcher — can address the specific mechanisms of failure rather than re-discover them. Publication of adverse findings is a normal and healthy part of applied actuarial research.

Q. Who benefits if I die before the vesting date? A. Nobody. There is no death benefit. Premiums paid up to the date of death represent the cost of cover during the accumulation period and are not returned.

Q. Can I stop paying premiums part-way through the accumulation period? A. The product design assumes level premiums for the full accumulation period. Lapse mid-term would ordinarily forfeit the policy. Insurers may offer paid-up or reduced-benefit options; those would be specified in the terms and conditions of any product actually launched.

Q. Is the income inflation-linked? A. In the paper's central reserving case, yes — the €16,000-per-year income is CPI-indexed at 2.5% per year. In the reference pricing example at entry 65 / vesting 85, the €1,000-per-month income is level in nominal terms. Any real product would specify one convention.

Q. Can I have a joint-life version? A. No — the specification examined is single-life only. A joint-life extension would be a natural workstream in a future paper but is not part of this design.

Q. How does this differ from a normal immediate annuity? A. A normal immediate annuity is bought with a single lump sum at retirement and pays income immediately. The design examined would have been bought with regular premiums over 10–25 years and paid income only from a later vesting date. The arithmetic of long deferral produces a much lower total cost per euro of eventual income, at the price of much higher tail risk to the consumer.

Q. Does the product have a Central Bank product approval? A. There is no statutory pre-approval requirement for a specific life-insurance product in Ireland. Insurers are authorised by the Central Bank for specific lines of business; they may launch products within those lines subject to the Insurance Distribution Directive's manufacturer requirements. The paper recommends voluntary pre-launch notification to the Central Bank for a novel product of this kind, if it were to proceed.

Q. What are the tax implications? A. The paper's working assumption is that premiums are paid from an ARF or vested PRSA and are treated as pension expenditure for tax purposes. Income payments would be taxable as pension income under PAYE. However, this treatment would require a Revenue advance opinion before any launch, and specific tax outcomes for individual consumers depend on personal circumstances.

Q. What if the insurer goes bust? A. Insurers authorised in Ireland fall within the Insurance Compensation Fund and Solvency II resolution frameworks. The paper does not go into detail on default risk to consumers; standard insurance-industry protections would apply.

Q. Does the DR 2026/269 Solvency II reform, effective 30 January 2027, change the finding? A. No — not on its own. The reform reduces the risk-margin cost-of-capital rate from 6.0% to 4.75%, which reduces the risk margin component of technical provisions. It does not change Article 138 (which sets the longevity stress). The paper's coverage-collapse mechanism is driven by the numerator (Own Funds run-off during the deferral period), not the denominator, so the reform is a helpful sensitivity but does not close the gap. Applied to the paper's central case, the reform reduces the required Day-1 own-funds injection at the fairness-viable frontier from about €168,000 per policy to something in the region of €145,000 to €155,000 per policy — meaningful but not sufficient.

Q. Does the paper propose that the Irish state should provide capital for a longevity-insurance market? A. No. The paper takes no position on whether the Irish state should have a role. What it records — in §9.4 and §12.5 — is that in several other European jurisdictions the state has, in various forms, provided either capital-backing or regulatory concessions to support longevity-insurance products. The paper lists three structural options that are within Irish technical reach if such a role were ever to be considered — an Ireland Strategic Investment Fund longevity-risk capital allocation, a Pensions Authority-sponsored mutual longevity structure, or a state-guaranteed reinsurance backstop — but explicitly does not advocate any of the three. The paper's role is to establish the finding; state-role decisions are a matter for the Department of Finance and the Oireachtas.

Q. What would need to happen for a product like this to become available in Ireland? A. On the paper's finding, at least one of the following would need to change: a materially reduced Solvency II capital requirement for this class of business (through an internal-model treatment, further reform of the standard formula, or a targeted regulatory concession); the availability of a domestic or European longevity-reinsurance market at scale that could be integrated into the pricing structure from inception; a state-backed capital-provisioning structure of the kind described in §9.4 of the paper; or a redesign of the product itself along one of the deferred design directions in §12.4 — for example a fund-linked payout structure or a cash-out option at vesting. Any one of these could open a route; the paper takes the position that none of them is on the near-term horizon in the specific combination required.

15. Glossary of terms

16. About the author

Donal Milmo-Penny, QFA FLIA, is founder and principal of SMP Financial Ltd, a Central Bank of Ireland-regulated firm (registration C42382). He is a Qualified Financial Adviser (QFA) and a Fellow of the Life Insurance Association (FLIA), and has spent more than three decades in the Irish life-insurance and pensions market. He is the author of the mylife.ie research paper series on Irish decumulation product design, and Research Lead at Mylife.ie.

Mylife.ie is a trading name of SMP Financial Ltd.

Mylife.ie · SMP Financial Ltd · Dublin, Ireland · Regulated by the Central Bank of Ireland (C42382).

17. About this paper

Citation. Milmo-Penny, D. (2026). Longevity Insurance — for the Irish ARF and vested PRSA market. Working Paper MWP-2026-04, v1.1.1, July 2026. Mylife.ie. Full technical paper available at mylife.ie.

Edition. The v1.1.1 edition is a four-part markdown document — Part 1 Body, Part 2 Annex A (stochastic mortality), Part 3 Annex B (full pricing and reserving surface), Part 4 Annex C (regulatory citations and backmatter) — together with the supporting workbook MWP-2026-04_Phase_F_Workbook_v05.1.xlsx, an Erratum register (Entries 1 through 10), a 72-row fact-check ledger, and an independent audit report. A consolidated single-file Master edition of the paper (markdown and PDF) is also published. Earlier PDF renderings (v1.0, 01 July 2026) are superseded and should not be relied on for their numbers or conclusions.

Classification. Adverse-finding paper: Solvency II standard-formula capital viability. The v1.1.1 finding is that the design examined is not commercially viable on the terms specified, under the current-rules Solvency II standard formula, at prices a reasonable consumer would accept as fair value.

Remuneration disclosure. This paper is research output. It is not an advertisement for a specific product from a specific insurer. Mylife.ie and SMP Financial Ltd have no commercial arrangement with any manufacturer to develop or distribute the product described in the paper.

AI-assisted preparation. The paper's supporting analytical workbook (pricing engine, reserving stack, stochastic mortality projections, and fact-check ledger) was assembled with substantial AI-assisted computation and code review. All numerical outputs were reconciled against a 72-row fact-check ledger and a five-pass independent audit. Every source cited in the paper is a primary source (regulation, statute, actuarial publication, or supervisory disclosure). No AI-generated content was accepted without human review by the author. This Reader's Guide was drafted by the author from the v1.1.1 markdown pack.

Copyright. © 2026 SMP Financial Ltd. All rights reserved. This guide may be quoted with attribution.

Disclaimer

This guide is consumer information published for general educational purposes. It is not personal financial advice, is not a recommendation, and is not a solicitation to buy or sell any financial product. Mylife.ie and SMP Financial Ltd make no warranty as to the accuracy or completeness of the information contained in this guide, and accept no liability for any decisions made or actions taken on the basis of it. Anyone considering a life-insurance or pensions decision should consult a suitably qualified financial adviser authorised by the Central Bank of Ireland.

Life insurance and pension products may be subject to change without notice. Tax treatment depends on individual circumstances and may change in future. Past performance is not a reliable indicator of future results.

End of Reader's Guide v1.1.2. Prepared July 2026 by Donal Milmo-Penny, QFA FLIA — Research Lead, Mylife.ie · SMP Financial Ltd, Dublin.