It makes sense that annuities would be widely used by workers as a way to replace the guaranteed lifetime income security that once was provided by pensions. But annuities are not as well understood, not as popular, and not as competitively priced, given the increased need for them, as one would hope. Life insurance is, in a sense, the opposite of an annuity. The purchaser of an annuity bets that he or she will live a long time. The purchaser of life insurance bets that he or she will die soon. Both products have optionlike payoffs, the values of which are conditional on the actual longevity of.
