Determinants of the Stated Probability of Purchase for Longevity Insurance

Michael A Guillemette (), Terrance K Martin (), Benjamin F Cummings () and Russell N James ()
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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.

The Geneva Papers on Risk and Insurance - Issues and Practice, 2016, vol. 41, issue 1, 4-23

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.

Date: 2016
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