Problems of Increasing Life Expectancy in Private Insurance - Theory and Practice for Germany
DIW Discussion Paper No. 258
35 Pages Posted: 11 Nov 2003
Date Written: July 2001
An unexpected increase in life expectancy has implications for private pensions (annuities). These can be offset by reducing pension payments, cross-subsidization of the pension payments, risk-taking of insurance companies or combining these policies. An empirical study of the German market of annuities shows that most of the companies under investigation dealt with the problem of an unexpected increase of life expectation in the 90ies by significant cross-subsidization of the pension payments from young policy holders. This paper discusses the implications such polices can have when the importance of private pensions increases in the future.
Keywords: life expectancy, private pensions, insurance
JEL Classification: G2, H55, J14
Suggested Citation: Suggested Citation