Bequest Provision Preferences in Commercial Annuities: An Experimental Test of the Role of Mortality Salience

Recent research demonstrates that personal mortality salience from annuity contemplation generates an avoidance response, reducing interest in purchasing annuities. However, theoretical models of mortality salience also predict an increased desire for investment in the future circumstances of surviving others ("symbolic immortality"), such as that provided by bequest provisions in an annuity contract. An experimental test confirms that those exposed to higher levels of personal mortality reminders exhibit a greater preference for an annuity paying lower income but with a bequest provision. Thus, the effects of mortality salience can drive annuity decisions, not only at the extensive margin (avoidance of any purchase), but also at the intensive margin (purchasing lower income by including a bequest provision).