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Pricing of variable long-term care annuities with guaranteed lifetime withdrawal and limited hospitalisation coverage benefits

Author

Listed:
  • Sara S. Moosavi
  • Amir T. Payandeh Najafabadi

Abstract

Improvements in medical technology and longevity risk increase the popularity of healthcare insurance products. This article combines several well-known healthcare products and develops a theoretical model for a variable annuity product with some specific benefits. More precisely, the new product is a variable annuity product that accompanies with long-term care coverage, limited hospitalisation coverage and a guaranteed lifelong withdrawal benefit option. Under a non-arbitrage market (the geometric Brownian motion) investment, the fair lam sum premium of such insurance products has been evaluated. Using an MCMC simulation method, a numerical study has been conducted to illustrate the capability of the product.

Suggested Citation

  • Sara S. Moosavi & Amir T. Payandeh Najafabadi, 2022. "Pricing of variable long-term care annuities with guaranteed lifetime withdrawal and limited hospitalisation coverage benefits," International Journal of Industrial and Systems Engineering, Inderscience Enterprises Ltd, vol. 41(2), pages 168-181.
    • Handle: RePEc:ids:ijisen:v:41:y:2022:i:2:p:168-181
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