The Private Life Annuity Market in Germany: Products and Money’s Worth Ratios

We explore the workings of the German private annuity market to evaluate whether annuities are delivering an adequate value for money by measuring their money’s worth. We examine key features of the German private annuity market and give a comprehensive description of the main product groups, taking into consideration the statutory obligation to distribute substantial parts of insurer’s annual profits to the annuitant. Relying on a large dataset covering about 90% of the German market, we calculate money’s worth ratios for private payout annuities and trace long-term developments.