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Modelling Home Equity Conversion Loans With Life Insurance Models

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  • Bojan Baškot

Abstract

Home equity represents a reserve that can be used for providing additional money for its owners during their retirement. Life insurance models can be successfully applied to model home equity conversion loans. The home equity conversion loan is a financial product that provides a certain flexibility by using home equity as a resource for a quality life during retirement. Home equity conversion loans do not have a predetermined maturity date, as do conventional loans. But, like every loan, it must be repaid. One potential advantage of using a home equity conversion loan during tough financial times instead of some types of need-based assistance is that eligibility is straightforward. Home equity conversion loans can be useful tools in the process of pension system reform.

Suggested Citation

  • Bojan Baškot, 2013. "Modelling Home Equity Conversion Loans With Life Insurance Models," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 58(199), pages 127-164, October -.
    • Handle: RePEc:beo:journl:v:58:y:2013:i:199:p:127-164
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    References listed on IDEAS

    as
    1. Cannon, Edmund & Tonks, Ian, 2008. "Annuity Markets," OUP Catalogue, Oxford University Press, number 9780199216994.
    2. Møller,Thomas & Steffensen,Mogens, 2007. "Market-Valuation Methods in Life and Pension Insurance," Cambridge Books, Cambridge University Press, number 9780521868778, January.
    3. Milevsky,Moshe A., 2006. "The Calculus of Retirement Income," Cambridge Books, Cambridge University Press, number 9780521842587, January.
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    More about this item

    Keywords

    home equity conversion loan; life insurance; actuarial present value; annuity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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