Determinants of the Stated Probability of Purchase for Longevity Insurance

20 Pages Posted: 24 Apr 2015 Last revised: 27 Apr 2016

See all articles by Michael Guillemette

Michael Guillemette

Texas Tech University - Department of Personal Financial Planning

Terrance Martin

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance; Texas Tech University

Benjamin F. Cummings

The American College of Financial Services

Russell N. James

Texas Tech University

Date Written: December 4, 2014

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, women, people who do not smoke and individuals with the highest incomes 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 net worth and higher coefficients of relative risk aversion. Our results may be of particular interest to policymakers, annuity companies and retirement plan providers.

Keywords: longevity insurance, deferred annuity, annuitization

JEL Classification: G22, D81

Suggested Citation

Guillemette, Michael and Martin, Terrance and Cummings, Benjamin F. and James, Russell N., Determinants of the Stated Probability of Purchase for Longevity Insurance (December 4, 2014). Guillemette, M. A., Martin, T. K., Cummings, B. F. and James, R. N. (2015). Determinants of the stated probability of purchase for longevity insurance. Geneva Papers on Risk and Insurance – Issues and Practice, 41(1), 4-23., Available at SSRN: https://ssrn.com/abstract=2596638 or http://dx.doi.org/10.2139/ssrn.2596638

Michael Guillemette (Contact Author)

Texas Tech University - Department of Personal Financial Planning ( email )

1301 Akron Ave, HS-260
Box 41210
Lubbock, TX 79409-1210
United States

Terrance Martin

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance ( email )

1201 W. University Drive
Edinburg, TX 78539-2999
United States
9402245027 (Phone)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Benjamin F. Cummings

The American College of Financial Services ( email )

270 S. Bryn Mawr Avenue
Bryn Mawr, PA 19010
United States

Russell N. James

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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