A Study on Consumer Choice between Fee Structures of Variable Annuity (금융소비자의 변액연금 수수료 체계 선택에 관한 연구 )

Ick Jin (진익)

A Study on Consumer Choice between Fee Structures of Variable Annuity

Journal of Insurance and Finance
2013, 24(3), pp.55-91
Publisher : Korea Insurance Research Institute
Research Area : Social Science > Business Management

Ick Jin ¹

¹보험연구원

Accredited

ABSTRACT

This paper investigates consumer choice between fee schemes of a variable annuity (VA). A consumer considering a purchase of a VA would evaluate how each fee scheme affects his or her expected utility. Assuming a risk-averse consumer, this paper intends to be a complement to previous studies which assume a risk-neutral consumer. According to simulation results, the back-end loaded fee of VAs appears to be relatively high compared with that of competing goods such as mutual funds. Requests for lower sales fees from consumers and regulators may continue until differential services can justify the gap. The portion of investment risk that is imposed on the consumer would be reduced under the back-end loading scheme. Attracted to the risk-sharing feature, the consumer may be willing to pay a higher sales fee. In this regard, the regulator could induce a more desirable outcome by expanding consumer choice rather than introducing indirect price regulation. Insurance companies would be better off diversifying sales fee schemes in order to explore additional demands on VAs from consumers with diverse risk appetites.

KEYWORDS

consumer choice, fee scheme, variable annuity, expected utility, risk averse, back-end loading, investment risk, price regulation

Citation status

* References for papers published after 2023 are currently being built.

[journal] 권용재 / 2012 / A Study on the Effects of Economic Variables on Lapse Rates of Variable Annuity and Variable Universal Life Insurance / 보험금융연구 / 보험연구원 23(4) : 3~28

[other] 금융감독원 / 2009 / 저축성보험에 대해 판매수수료 후취방식 도입 추진 / 보도자료

[other] 금융감독원 / 2010 / 보험상품의 사업비 등 공시 강화 / 보도자료

[other] 금융소비자연맹 / 2012 / K-컨슈머리포트 제2012-2호 변액연금보험 비교정보 제공 / 보도자료

[other] 금융위원회 / 2012 / 보험회사의 판매수수료 체계 개선방안 마련 / 보도자료

[other] 금융위원회 / 2012 / 연금저축 활성화를 위한 통합공시 및 관리 강화 / 보도자료

[other] 금융위원회 / 2013 / 2013년도 금융위원회 업무보고 참고자료

[journal] 노건엽 / 2012 / Evaluating the Guarantee Reserves in Variable Insurance by Stock Return Scenarios with Stochastic Volatility / 보험금융연구 / 보험연구원 23(1) : 3~34

[journal] 류근호 / 2002 / Mean Preserving Increase in Risk and an Optimal Coverage of Insurance / 리스크관리연구 / 한국리스크관리학회 13(2) : 61~95

[report] 변액보험 보증준비금 평가 TF / 2009 / 변액보험 보증리스크 평가 보고서

[journal] 오창수 / 2009 / A Study on the Analysis for Introducing Back-end Loading System / 보험학회지 / 한국보험학회 (83) : 123~164

[report] 이기형 / 2012 / 소비자중심의 변액연금보험 개선방안 연구: 공시 및 상품설계 개선을 중심으로 / 보험연구원

[other] 조영현 / 2012 / 후취형 변액연금 상품의 영향 분석 / 미발간 자료

[book] 한국보험계리사회 / 2003 / 연금수리

[journal] 홍순구 / 2001 / A Reexamination of the Bernoulli Principle under Initial Wealth Uncertainty / 보험학회지 59 : 295~306

[journal] 홍순구 / 2001 / 파레토기준과 비례보상계약 / 보험학회지 58 : 41~85

[journal] 홍순구 / 2004 / A Mean Preserving Spread Interpretation of the Bernoulli Principle Under Initial Wealth Uncertainty / 리스크관리연구 / 한국리스크관리학회 15(2) : 29~52

[journal] 홍순구 / 2007 / Expectation Dependence and the Bernoulli Principle Under Multiple Sources of Risk / 보험금융연구 / 보험연구원 18(2) : 79~114

[journal] 홍순구 / 2008 / Mossin’s Theorem for Deductible Insurance Policies When Initial Wealth is Random / 보험금융연구 / 보험연구원 19(2) : 3~32

[report] 황진태 / 2010 / 생명보험 상품별 해지율 추정 및 예측 모형 / 보험연구원

[journal] Arrow, K. J. / 1974 / Optimal Insurance and Generalized Deductibles / Scandinavian Actuarial Journal 1 : 1~42

[book] Bowers, Newton / 1997 / Actuarial Mathematics / Society of Actuaries

[book] Campbell, J. Y. / 1997 / The Econometrics of Financial Markets / Princeton University Press

[book] Efron, B. / 1993 / An Introduction to the Bootstrap / Chapman & Hall/CRC

[other] European Commission / 2002 / Insurance Mediation Directive(2002/92/EC)

[other] European Commission / 2012 / Proposal for a Directive of the European Parliament and of the Council on Insurance Mediation

[other] Financial Service Authority / 2007 / A Review of Retail Distribution

[book] Hardy, Mary R. / 2003 / Investment Guarantees: Modeling and Risk Management for Equity-Linked Life Insurance / Wiley & Sons. Inc

[other] Kreueger, Cheryl / 2000 / Life and Annuity Products and Features / SOA Study Notes

[journal] Kunsch, H. R. / 1989 / The Jackknife and the Bootstrap for General Stationary Observations / Annals of Statistics 17 : 1217~1241

[journal] Lahiri, S. N. / 1999 / Theoretical Comparisons of Block Bootstrap Methods / Annals of Statistics 27 : 386~404

[other] LIMRA / 2011 / Fact Book on Retirement Income 2011-A Review of Trends and Activity in the Retirement Income Market

[journal] Merton / 1977 / An Analytic Derivation of the Cost of Deposit Insurance and Loan Guarantees: An Application of Modern Option Pricing Theory / Journal of Banking of Business : 3~11

[journal] Mossin, J. / 1968 / Aspects of Rational Insurance Purchasing / Journal of Political Economy 76 : 533~568

[book] Polkinghorn, Philip / 1996 / Valuation of Life Insurance Liability / ACTEX Publication

[book] Promislow / 2006 / Fundamentals of Actuarial Mathematics / John Wiley & Sons, Ltd

[journal] Raviv, A. / 1979 / The Design of an Optimal Insurance Policy / American Economic Review 69 : 84~96

[journal] Rothschild, M. / 1970 / Increasing Risk I: A Definition / Journal of Economic Theory 2 : 225~243

[journal] Schlesinger / 2005 / Mossin's Theorem for Upper-Limit Insurance Policies / Journal of Risk and Insurance

[other] Simon, Carl / 1994 / Mathematics for Economists

[report] Sugano, D. / 2006 / Variable Annuity Contracts under state Statutes Relating to Securities and to Insurance / Legislative Reference Bureau

[book] Varian, H. / 1992 / Microeconomic Analysis / Norton

KJCKorea
Journal Central

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59