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Marriage and Individual Equity Release Contracts with Dread Disease Insurance as a Tool for Managing the Pensioners’ Budget

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  • Agnieszka Marciniuk

    (Department of Statistics, Faculty of Economics and Finance, Wroclaw University of Economics and Business, ul. Komandorska 118/120, 53-345 Wrocław, Poland)

  • Beata Zmyślona

    (Department of Statistics, Faculty of Economics and Finance, Wroclaw University of Economics and Business, ul. Komandorska 118/120, 53-345 Wrocław, Poland)

Abstract

In many countries around the world, demographic and civilization changes have brought about the phenomenon of aging societies. This phenomenon affects the economy, especially the pension and health care systems, causing difficulties in their financing. The implementation of a policy that would effectively manage the problem of the longevity risk is thus required. Using housing resources and private health insurance to improve retirees’ living standards may serve this purpose. The instruments we propose comprise two variants of contracts: the first for a marriage, the second for an individual client. We analysed the cash flow in both the cases. The results suggest that the amount of cash flows related to reverse equity and dread disease insurance benefits depends on the spouse’s economic status, age, and health conditions. The benefits of the two variants of the contract vary. This paper examines numerous strategies for selecting the type of the contract, taking into consideration the abovementioned factors.

Suggested Citation

  • Agnieszka Marciniuk & Beata Zmyślona, 2022. "Marriage and Individual Equity Release Contracts with Dread Disease Insurance as a Tool for Managing the Pensioners’ Budget," Risks, MDPI, vol. 10(7), pages 1-15, July.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:7:p:140-:d:861007
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    References listed on IDEAS

    as
    1. Shao, Adam W. & Hanewald, Katja & Sherris, Michael, 2015. "Reverse mortgage pricing and risk analysis allowing for idiosyncratic house price risk and longevity risk," Insurance: Mathematics and Economics, Elsevier, vol. 63(C), pages 76-90.
    2. Beata Zmyslona & Agnieszka Marciniuk, 2020. "Financial Protection for the Elderly - Contracts Based on Equity Release and Critical Health Insurance," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 867-882.
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