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Valuation of variable long-term care and limited hospitalization coverage benefits and two investment funds

  • Mathematical methods in data science
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Abstract

Population aging along with rise of medical cost simultaneously increases popularity and uncertainty of healthcare products. To response such challenges, insurance companies try to design/introduce more and more advanced and innovative products. In this direction, this study combines some popular features of newly developed healthcare products and introduces a new long-term care product. More precisely, it improves a variable annuity product by (1) including benefits of: guaranteed lifelong withdrawal option, long-term care coverage and limited hospitalization coverage, and (2) improving the product investment fund from a single fund into two risk-free and risky funds. Theoretical foundation of the product and its fair value has been evaluated, and its practical application has been given through a simulation study.

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Data Availability

We do not use any real data. Therefore, we do not have any data to make statement about its availability.

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Acknowledgements

We would like to thank referees whose helpful comments led to substantial improvements in this paper. This work was supported by the Iran National Science Foundation (INSF) Grant No. 98022900.

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There is no financial support for the study. Authors declare that they have no conflict of interest.

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Authors and Affiliations

  1. Department of Actuarial Science, Faculty of Mathematical Sciences, Shahid Beheshti University, Evin, 1983969411, Tehran, Iran

    Sara S. Moosavi & Amir T. Payandeh Najafabadi

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  1. Sara S. Moosavi
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  2. Amir T. Payandeh Najafabadi
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Correspondence to Amir T. Payandeh Najafabadi.

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Moosavi, S.S., Najafabadi, A.T.P. Valuation of variable long-term care and limited hospitalization coverage benefits and two investment funds. Soft Comput 26, 3227–3235 (2022). https://doi.org/10.1007/s00500-022-06817-2

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