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Longevity insurance markets and Money's worth ratios in Korea

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  • LEE, KYONGHEE

Abstract

The rare annuitization, thin immediate annuity market, and date limitation have prevented the attempts to analyze the longevity insurance market in Korea. The purpose of this paper is to examine the relative value of Korean annuity rates to theoretical ones and to provide a new evidence on the function of the voluntary annuity market in terms of the money's worth ratio (MWR). Our results show that the immediate annuity market in Korea is reasonably efficient. For example, the money's worth ratio of an immediate annuity of a 10-year guarantee period for a 65-year-old male is estimated to be about 0.8 with the general population mortality rate, while it improves to 0.9 with the annuitant mortality table. Average MWR is similar to that of other countries with thin annuity market, which show that annuitants in Korea pay a comparable cost to that in other countries.

Suggested Citation

  • Lee, Kyonghee, 2013. "Longevity insurance markets and Money's worth ratios in Korea," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(4), pages 435-454, October.
    • Handle: RePEc:cup:jpenef:v:12:y:2013:i:04:p:435-454_00
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    Cited by:

    1. Maria Alexandrova & Nadine Gatzert, 2019. "What Do We Know About Annuitization Decisions?," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 22(1), pages 57-100, March.

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