Study: Does pessimism really suppress annuity sales?
February 6, 2023 by
Steven A. Morelli
A prospect’s pessimism about their lifespan is usually seen as a high hurdle in an annuity sale, but lowering the dour outlook has less impact than in raising the objective facts about longevity, according to a recent study.
Researchers were taking a crack at the “annuity puzzle” that has vexed the insurance industry since annuities were invented – why if people prefer having a regular pension payout do they not buy an annuity, essentially a private pension, with their retirement funds?
According to the Boston College Center for Retirement Research study, What Matters for Annuity Demand: Objective Life Expectancy or Subjective Survival Pessimissim?:“Since 1965, academics have argued that, under a broad set of assumptions, individuals should annuitize a large part of their assets. For nearly as long, it has also been documented that annuitization rates fall short of what seem to be optimal levels, a fact known as the ‘annuity puzzle.’ ”
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Originally Posted
at
InsuranceNewsNet on February 2, 2023 by Steven A. Morelli.