Adjusted Money's Worth Ratios in Life Annuities

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Jaime Casassus; Eduardo Walker;
  • Subject: money's worth ratios, annuities, insurance companies, credit risk, liquidity premium, default probability, multi-factor continuous time models, emerging markets, Chile
    • jel: jel:G22 | jel:G13 | jel:G28

The Money's Worth Ratio (MWR) measures an annuity's actuarial fairness. It is calculated as the discounted present value of expected future payments divided by its cost. We argue that from the perspective of annuitants, this measure may overestimate the value-for-money ... View more
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