Life insurance, precautionary saving and contingent bequest
AbstractPurchasing life insurance is for the welfare of young children, par-ticularly preteens, who are liquidity constrained. In this paper, we present a life cycle model of life insurance that takes into account the ages of these young beneciaries. We show that, as the child ages, the need for protection is reduced and, consequently, the size of contingent bequest may shrink. The demand for life insurance is positively related to the number, age differentials, living standards, and the time needed to reach adulthood. Also, the breadwinner's life-time uncertainty and the unfairness of the insurance market encourage precautionary saving.
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Bibliographic InfoArticle provided by Elsevier in its journal Mathematical Social Sciences.
Volume (Year): 48 (2004)
Issue (Month): 1 (July)
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Web page: http://www.elsevier.com/locate/inca/505565
Other versions of this item:
- Fwu-Ranq Chang, 2001. "Life Insurance, Precautionary Saving and Contingent Bequest," CESifo Working Paper Series 444, CESifo Group Munich.
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