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Demand for life annuities, critical illness insurance, and long‐term care insurance

Cheng Wan et al.

Journal of Risk and Insurance2025https://doi.org/10.1111/jori.70005article
AJG 3ABDC A
Weight
0.41

Abstract

We develop a rich life‐cycle model to assess the demand for life annuities, critical illness insurance, and long‐term care (LTC) insurance by retirees in a portfolio‐allocation setting. We calibrate our model to urban China, where retirees face limited public insurance and undeveloped private markets. We show that retirees with a low public pension should allocate at least 30% of their financial wealth at retirement to a life annuity. Those with an average pension should allocate at least 30% to critical illness insurance. The allocation to LTC insurance ranges from 5% to 33% across all economic profiles considered. Access to critical illness and LTC insurance does not necessarily increase annuity demand. However, access to annuities decreases LTC insurance demand. Our results suggest that countries with limited public insurance should first ensure the adequacy of retirement income and then focus on covering catastrophic medical expenses while providing basic LTC services for all.

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https://doi.org/https://doi.org/10.1111/jori.70005

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@article{cheng2025,
  title        = {{Demand for life annuities, critical illness insurance, and long‐term care insurance}},
  author       = {Cheng Wan et al.},
  journal      = {Journal of Risk and Insurance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/jori.70005},
}

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Demand for life annuities, critical illness insurance, and long‐term care insurance

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Evidence weight

0.41

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.25 × 0.4 = 0.10
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.