IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/35122.html

Risky Insurance: Life-Cycle Insurance Portfolio Choice with Incomplete Markets

Author

Listed:
  • Joseph S. Briggs
  • Ciaran Rogers
  • Christopher Tonetti

Abstract

We study consumer demand for savings, life insurance, annuities, and long-term care insurance using novel survey data and a structural life-cycle model. We document that individuals perceive substantial insurance nonpayment risk, and these beliefs predict ownership. Embedding elicited beliefs into an incomplete-markets model alongside additional real-world insurance features, we match empirical patterns of low participation. Relative to a no-insurance benchmark, access to existing imperfect insurance reduces median wealth by 16% and generates a modest 0.6% welfare gain. Eliminating nonpayment risk would substantially increase insurance ownership, yield a further 11% decline in median savings, and generate an additional 1.7% welfare gain.

Suggested Citation

  • Joseph S. Briggs & Ciaran Rogers & Christopher Tonetti, 2026. "Risky Insurance: Life-Cycle Insurance Portfolio Choice with Incomplete Markets," NBER Working Papers 35122, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35122
    Note: AG AP EFG PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w35122.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:35122. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.