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Longevity insurance markets and Money's worth ratios in Korea*

Published online by Cambridge University Press:  03 June 2013

KYONGHEE LEE
KYONGHEE LEE*
Affiliation:
Department of Risk Management and Insurance, Sangmyung University, Cheonan, The Republic of Korea (e-mail: khlee@smu.ac.kr)
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Abstract

The rare annuitization, thin immediate annuity market, and date limitation have prevented the attempts to analyze the longevity insurance market in Korea. The purpose of this paper is to examine the relative value of Korean annuity rates to theoretical ones and to provide a new evidence on the function of the voluntary annuity market in terms of the money's worth ratio (MWR). Our results show that the immediate annuity market in Korea is reasonably efficient. For example, the money's worth ratio of an immediate annuity of a 10-year guarantee period for a 65-year-old male is estimated to be about 0.8 with the general population mortality rate, while it improves to 0.9 with the annuitant mortality table. Average MWR is similar to that of other countries with thin annuity market, which show that annuitants in Korea pay a comparable cost to that in other countries.

Keywords

Korean annuity marketmoney's worth ratios
Type
Issues and Policy
Information
Journal of Pension Economics & Finance , Volume 12 , Issue 4 , October 2013 , pp. 435 - 454
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

*

We grately appreciate the two anonymous referees for useful comments.

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