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

Agnieszka Marciniuk and Beata Zmyślona
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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

Risks, 2022, vol. 10, issue 7, 1-15

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.

Keywords: equity release; reverse annuity contract; critical health insurance; cash flow; financial protection of elderly (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2022
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