Background The World Health Organization has proposed a model of healthy aging built around the concept of functional ability, comprising an individual’s intrinsic capacity, the physical and social environment they occupy, and interactions between the two. However, these constructs have been poorly defined. We examined the structure of intrinsic capacity in a representative sample of the Chinese population aged 60 years and over and assessed its value in predicting declining performance in instrumental activities of daily living (IADLs) and activities of daily living (ADLs) using similar methods to a construct validation previously undertaken in an English cohort. Methods De-identified data were accessed on 7643 participants of the China Health and Retirement Longitudinal Study (CHARLS) 2011 and 2013 waves. Incrementally related structural equation modelling was applied, including exploratory and confirmatory factor analysis, and path analysis. Multiple linear regression tested construct validity, and simple and serial mediation models assessed predictive validity. Results Factor loadings for the models showed a clear structure for intrinsic capacity: one general factor with five subfactors - locomotor, cognitive, psychological and sensory capacities, and vitality (reflecting underlying physiologic changes). Intrinsic capacity predicted declining performance in both IADLs (Standardized Coefficient (SE) -0.324 (0.02), p<0.001) and ADLs (-0.227 (0.03), p<0.001), after accounting for age, sex, education, wealth and number of chronic diseases. Each characteristic was associated with intrinsic capacity, providing strong construct validity. Conclusions Assessment of intrinsic capacity provides valuable information on an individual’s subsequent functioning beyond that afforded by age, other personal factors and multimorbidity.

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Equity release products are sorely needed in an aging population with high levels of home ownership. There has been a growing literature analyzing risk components and capital adequacy of reverse mortgages in recent years. However, little research has been done on the risk analysis of other equity release products, such as home reversion contracts. This is partly due to the dominance of reverse mortgage products in equity release markets worldwide. In this article we compare cash flows and risk profiles from the provider's perspective for reverse mortgage and home reversion contracts. An at-home/in long-term care split termination model is employed to calculate termination rates, and a vector autoregressive (VAR) model is used to depict the joint dynamics of economic variables including interest rates, house prices, and rental yields. We derive stochastic discount factors from the no arbitrage condition and price the no negative equity guarantee in reverse mortgages and the lease for life agreement in the home reversion plan accordingly. We compare expected payoffs and assess riskiness of these two equity release products via commonly used risk measures: Value-at-Risk (VaR) and Conditional Value-at-Risk (CVaR).

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