Journal of Scientific Papers

ECONOMICS & SOCIOLOGY


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ISSN 2071-789X

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Valuations of benefits paid from equity release products in the context of the changing financial requirements of elderly persons

Vol. 13, No 1, 2020

Patrycja Kowalczyk-Rólczyńska

 

Wrocław University of Economics and Business,

Wrocław, Poland

E-mail: patrycja.kowalczyk@ue.wroc.pl

ORCID 0000-0002-7952-7678

Valuations of benefits paid from equity release products in the context of the changing financial requirements of elderly persons

 

 

 

Abstract. This paper presents a comparison of valuations of benefits paid under the framework of equity release products. Such benefits are adjusted to the changing structure of financial needs and requirements brought about by ageing processes and health deterioration among the elderly. The first of the two adopted variants takes into consideration the number of years for which elderly persons may reasonably expect to retain good health. The second variant is grounded on the assumption that the demand for financial support will increase at each consecutive stage of the ageing process. Valuations of benefits paid for each scenario were calculated using life annuities. The findings suggest that the values of benefits paid in each of the scenarios are higher for males. However, compared to old-age pension benefit values, both seem to offer a more profitable solution for females.

 

Received: August, 2019

1st Revision: November, 2019

Accepted: February, 2020

 

DOI: 10.14254/2071-789X.2020/13-1/5

JEL ClassificationJ26, J14, G21, G22

Keywordselderly persons, equity release, benefits, life annuities