Reverse Mortgages for Managing Longevity Risk in Korea

Jaehwan Yang and Yoonkyung Yuh

Hitotsubashi Journal of Economics, 2019, vol. 60, issue 1, 21-40

Abstract: This study examines how longevity risk can be alleviated by using reverse mortgage loan system in Korea, Joo-Taek-Yeon-Keum (JTYK). We compare the expected utility value of JTYK borrowers during retirement with that of non-JTYK borrowers, and identify characteristics of groups earning the greatest benefits from the JTYK. The results imply that it is especially beneficial for homeowners aged 67 and older, and its benefit increases if the bequest value is included. We also calculate the Moneyʼs Worth Ratio (MWR) of the JTYK, and show that MWRs increase as the opt-in age increases if the bequest is considered as financial gain.

Keywords: reverse mortgage; longevity risk; expected utility function; optimization; bequest (search for similar items in EconPapers)
JEL-codes: C61 D14 G22 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/30360/HJeco0600100210.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:60:y:2019:i:1:p:21-40

DOI: 10.15057/30360

Access Statistics for this article

More articles in Hitotsubashi Journal of Economics from Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Digital Resources Section, Hitotsubashi University Library ().