Longevity annuities use mortality credits to pool money and pay out the remaining policy holders' claims, this being living a long life.
The logic that makes fire insurance a prevalent means for coping with the financial risk of house fires would seem to argue for greater use of longevity insurance for retirement planning: Few people will live to a very old age, so it doesn't make sense for everyone to try to cover that possibility with savings and investments.
[5] Summer of 2014, the IRS and Treasury Department finalized the creation of qualifying longevity annuity contracts, or QLACs, under the required minimum distribution (RMD) rules of Internal Revenue Code section 401(a)(9).
Providing an exception to the RMD rules allowing an IRA owner to use the lesser of 25% of account owners total IRA account balance or $125,000 to deferred income annuity or longevity annuity that provides no cash value and promises income payments no later than age 85.
The economic reason for the high return at low risk is that one is giving up any claim on that initial $20,000 investment on behalf of one's heirs.