Refundable income annuities: Feasibility of money-back guarantees

Moshe Milevsky and Thomas S. Salisbury

Insurance: Mathematics and Economics, 2022, vol. 105, issue C, 175-193

Abstract: Refundable income annuities (IA), such as cash-refund and instalment-refund, differ in material ways from the life-only version beloved by economists. In addition to lifetime income they guarantee the annuitant or beneficiary will receive their money back albeit slowly over time. Although we document that refundable IAs now represent the majority of sales in the U.S., they are mostly ignored by insurance and pension economists. Indeed, their pricing, duration, and money's-worth-ratio is complicated by recursivity which will be explained, and we offer a path forward to make refundable IAs tractable.

Keywords: Life annuities; Cash refunds; Refundable income annuities; Money's worth ratio; Pensions; Retirement planning (search for similar items in EconPapers)
JEL-codes: D15 G22 G52 J32 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167668722000312
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Refundable income annuities: Feasibility of money-back guarantees (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:insuma:v:105:y:2022:i:c:p:175-193

DOI: 10.1016/j.insmatheco.2022.03.004

Access Statistics for this article

Insurance: Mathematics and Economics is currently edited by R. Kaas, Hansjoerg Albrecher, M. J. Goovaerts and E. S. W. Shiu

More articles in Insurance: Mathematics and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().