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Choosing the highest annuity payout: the role of intermediation and firm reputation

Author

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  • Cristian Escudero

    (University of Chile)

  • José L. Ruiz

    (University of Chile)

Abstract

In this paper, we analyse retirees’ decision-making from the different bids made available by life insurance companies in the Chilean annuity market. We find that choosing the highest annuity payout was positively (negatively) correlated with the advice given by independent brokers (sales agents and average years of education in the municipality) for a January 2008–May 2018 sample. We also found that retirees were willing to pay for firm reputation. In addition, people who are more likely to take a pension payout without consulting intermediaries are older, married, have a higher pension balance and purchase an immediate annuity. These findings are of interest to those seeking to improve the efficiency and effectiveness of the annuity system.

Suggested Citation

  • Cristian Escudero & José L. Ruiz, 2022. "Choosing the highest annuity payout: the role of intermediation and firm reputation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(4), pages 973-1004, October.
    • Handle: RePEc:pal:gpprii:v:47:y:2022:i:4:d:10.1057_s41288-021-00236-4
    DOI: 10.1057/s41288-021-00236-4
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