Description: This paper applies the research in Prospect Theory of Kahneman and Tversky to explain why sales of annuities lag sales of life insurance products. The author theorizes that life insurance is easier to sell because customers perceive themselves to be in the domain of losses, while potential annuity customers perceive themselves to be in the domain of gains. Kahneman and Tversky showed us that people are mostly risk averse in the domain of gains and risk seeking in the domain of losses. Purchase of an annuity or life product is a risky investment. Customers will find it easier to take the risk in the life insurance domain of losses than the annuity domain of gains. The author then proposes a hybrid life annuity product that might address both mortality and longevity risk in one product that would allow both products to be more competitive than stand-alone products.

Description: This paper applies the research in Prospect Theory of Kahneman and Tversky to explain why sales of annuities lag sales of life insurance products. The author theorizes that life insurance is easier to sell because customers perceive themselves to be in the domain of losses, while potential annuity customers perceive themselves to be in the domain of gains. Kahneman and Tversky showed us that people are mostly risk averse in the domain of gains and risk seeking in the domain of losses. Purchase of an annuity or life product is a risky investment. Customers will find it easier to take the risk in the life insurance domain of losses than the annuity domain of gains. The author then proposes a hybrid life annuity product that might address both mortality and longevity risk in one product that would allow both products to be more competitive than stand-alone products.

Description: Diverse Risks 2016 Call for Essays

Description: Many seniors who own houses in the United States have most of their wealth in their houses. Home Equity Conversion Mortgages are designed to allow seniors to borrow money against their house. This paper describes a stochastic simulation approach used to estimate the amount of a level-payment annuity payable as long as the senior is alive and living in his/her home. From Actuarial Research Clearing House 1990, VOL. 2.

Description: This issue of The Retirement Forum presents the four prize-winning papers from the Retirement 20/20 Call for Models for Public Pension Plans Contest, which was conducted in 2018, and includes commentary from reviewers of these papers and replies from the authors.