Publication Type

Journal Article

Version

publishedVersion

Publication Date

2-2024

Abstract

Loan-type reverse mortgage plans and sell-type home reversion plans for retirement financing are two well-known equity release plans that entitle homeowners not only to release cash from their properties but also to allow them to age in place. Recently, a new hybrid equity release plan was proposed to incorporate the home reversion plan’s features with an option of staying in the property for a fixed period without being subject to survival. This additional option provides flexibility to homeowners to better meet their retirement financial and personal needs by reducing the financial uncertainty of home reversion products. In this article, we propose an enhanced home reversion plan with some new features to meet retirees’ other financial needs, such as life annuity incomes and guaranteed return of principal invested. An actuarial framework is provided to analyze the cost components of each benefit offered under the enhanced home reversion product. Numerical illustrations are presented to demonstrate and examine the actuarial values of the benefits and product risks with different parameter configurations under the recent Singapore mortality data set.

Keywords

Equity release products, Equivalence principle, Lease Buyback Scheme, Reverse mortgage

Discipline

Asian Studies | Finance | Gerontology | Real Estate

Research Areas

Econometrics

Publication

Risks

Volume

12

Issue

2

First Page

1

Last Page

13

ISSN

2227-9091

Identifier

10.3390/risks12020022

Publisher

MDPI

Copyright Owner and License

Authors-CC-BY

Creative Commons License

Creative Commons Attribution 3.0 License
This work is licensed under a Creative Commons Attribution 3.0 License.

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Additional URL

https://doi.org/10.3390/risks12020022

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