Many countries and their pay-as-you-go pension systems are currently facing extensive challenges. Demographic changes such as the continuously increasing life expectancy together with low birth rates emphasize the need for innovation and a better customer understanding in the retirement insurance sector to prevent old-age poverty. An essential aspect is to understand the policyholders' decision-making. Applying different theories of the field of behavioral insurance, we provide a comprehensive analysis of the policyholders' perspective. We derive risk-return profiles, the willingness-to-pay, and evaluate retirement products under expected utility theory, cumulative prospect theory and the more recently introduced multi cumulative prospect theory. We model a traditional participating life insurance product providing a cliquet-style guarantee and two modern product designs, which contain a different type of guarantee. These alternatives offer relief for insurance companies against the background of currently low interest rates and fluctuating capital markets. Our modeling ensures a fair situation for the equityholders and compensates the policyholders for what they perceive as weaker guarantees. We focus on the accumulation phase of the products and evaluate them from the customers' perspective. This combination of behavioral insurance and actuarial modeling provides insights into the demand decisions individuals face in the context of old-age provision, on the one hand, and the characteristics that different product designs entail, on the other. The results of the numerical analysis show that it depends on the underlying methodology, as well as modeling, which policy seems most appealing to the customer and how large the differences between the products are. Furthermore, they demonstrate that certain information and key figures might be misleading and may raise wrong expectations when provided to the customer.     «

Many countries and their pay-as-you-go pension systems are currently facing extensive challenges. Demographic changes such as the continuously increasing life expectancy together with low birth rates emphasize the need for innovation and a better customer understanding in the retirement insurance sector to prevent old-age poverty. An essential aspect is to understand the policyholders' decision-making. Applying different theories of the field of behavioral insurance, we provide a comprehensive a...     »