Insurance – Risk Management – ​​InsuranceNewsNet

MAY 11, 2022 (NewsRx) — By a News Reporter – Staff News Editor at Daily Insurance News — Findings from risk management research are discussed in a new report. According to news from Shah Alam, Malaysia, by NewsRx correspondents, the research said, “After retirement, annuities provide a steady stream of income to retirees. However, the annuity rate is relatively low in the insurance market in many countries around the world. »

Financial support for this research includes Lestari Grant, Universiti Teknologi MARAMalaysia Award: 600-IRMI/DANA5/3/LESTARI(0134/2016).

Journalists obtained a quote from Teknologi MARA University research: “Previous studies have shown that substandard health in retirement reduces annuity due to adverse selection. A recent innovation introduces an improved annuity scheme where people with impaired health are entitled to higher annuity payments. However, this market is less explored in countries other than the UK. This article aims to study the optimal annuity rate when standard and sub-standard annuity rates are offered in the market. The life cycle model in this article incorporates several health states based on the probability of events and measures of quality of life. Our framework consists of two important parts. First, we estimate the transition probabilities of all health states in our Markov model using reliable national data. Second, we derive the optimal consumption and rent solution to maximize a retiree’s expected lifetime utility given the uncertainty of future health risk. Moreover, we also consider the bequest motive in our optimization problem.

According to the news editors, the research concluded: “Our results show that the optimal annuity is determined by the choice of bequest and risk aversion parameters, as well as the health status of the annuitant. While the health-dependent utility parameter only affects our results for some cases.

For more information on this research, see: The impact of health problems on the optimal pension of retirees. Risks, 2022.10(75):75. (Risks – http://www.mdpi.com/journal/risks). The Risks editor is MDPI SA.

A free version of this review article is available at https://doi.org/10.3390/risks10040075.

Our reporters report that more information can be obtained by contacting Nurin Haniah Asmuni, Center for Actuarial StudiesFaculty of Computer Science and Mathematics, Teknologi MARA University, Shah Alam 40450, Malaysia. Other authors of this research include Ken Seng TanSachi Purchal.

(Our reports provide factual information on research and discoveries around the world.)