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Virtuous innovation or obfuscation? Product innovation in the variable annuities market

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  • Xiaochen Jing
  • Daniel Bauer
  • J. Tyler Leverty

Abstract

Variable Annuities, which comprise a substantial proportion of the retirement products sold by insurance companies, have become increasingly complex over the past decades. We investigate the drivers of the product trends. We distinguish “virtuous” innovations that expand upon the existing set of consumption paths in retirement from “obfuscating” innovations that increase complexity without clear benefits to consumers. We document a recurring pattern where, in each benefit category, obfuscating products follow the introduction of virtuous innovations. This pattern generates the overall increase in product complexity. Our results challenge prevailing perspectives on Variable Annuities in the popular press and the literature.

Suggested Citation

  • Xiaochen Jing & Daniel Bauer & J. Tyler Leverty, 2025. "Virtuous innovation or obfuscation? Product innovation in the variable annuities market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 92(4), pages 978-1012, December.
    • Handle: RePEc:bla:jrinsu:v:92:y:2025:i:4:p:978-1012
    DOI: 10.1111/jori.70027
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