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Determinants of the Stated Probability of Purchase for Longevity Insurance

Author

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  • Michael A Guillemette

    (Department of Personal Financial Planning, University of Missouri, 239 Stanley Hall, Columbia, MO 65211, U.S.A..)

  • Terrance K Martin

    (Department of Economics and Finance, College of Business Administration, University of Texas Rio Grande Valley, 1201 W. University Drive, Edinburg, TX 78539, U.S.A.)

  • Benjamin F Cummings

    (Finance Department, Erivan K. Haub School of Business, Saint Joseph’s University, 5600 City Avenue, Philadelphia, PA 19131, U.S.A.)

  • Russell N James

    (Department of Personal Financial Planning, Texas Tech University, 1301 Akron, Lubbock, TX 79409, U.S.A.)

Abstract

We study the determinants of the stated probability of purchase for a deferred annuity that pays out at age 80 or 85, which we reframe as “longevity insurance”, using the Survey of Household Financial and Risk Management. Our results indicate that younger cohorts and women are more likely to express a desire to purchase longevity insurance in the future. The stated probability of purchase for longevity insurance was lower for respondents with greater home equity and higher coefficients of relative risk aversion. Our results may be of particular interest to policymakers, annuity companies and retirement plan providers.

Suggested Citation

  • Michael A Guillemette & Terrance K Martin & Benjamin F Cummings & Russell N James, 2016. "Determinants of the Stated Probability of Purchase for Longevity Insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(1), pages 4-23, January.
    • Handle: RePEc:pal:gpprii:v:41:y:2016:i:1:p:4-23
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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.
    2. Hui-Shan Lee & Kevin-Lock-Teng Low & Shyue-Chuan Chong & Bik-Kai Sia, 2018. "Influence of Secondary and Tertiary Literacy on Life Insurance Consumption: Case of Selected ASEAN Countries," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(1), pages 1-15, January.
    3. Mohamad Hassan Abou Daya & Carole Bernard, 2022. "What matters in the annuitization decision?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-12, December.
    4. Vladimír Baláž, 2023. "Indulgence, Self-Control, and Annuity Preferences: Annuity Choices by Members of the Slovak-Funded Private Pension Pillar," Social Sciences, MDPI, vol. 12(3), pages 1-17, March.
    5. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).

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