Optimal term life insurance - A practical solution

Haim Levy*, Julian L. Simon, Neil A. Doherty

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This paper aims to offer a reasonable, practical solution to the life insurance decision facing families with a single wage earner upon whom the remaining family members are dependent. The solution depends upon the individual's age, probability of dying, planning horizon, earnings, wealth, degree of risk aversion, and the social insurance that would be received by the family. It is shown that, under various realistic assumptions, although the essence of the problem is its multiperiod nature, the solution reduces to a sequence of single-period decisions.

Original languageEnglish
Pages (from-to)81-93
Number of pages13
JournalInsurance: Mathematics and Economics
Volume7
Issue number2
DOIs
StatePublished - Apr 1988

Keywords

  • Life insurance
  • Multiperiod utility functions
  • Myopic policy
  • Optimal term insurance

Fingerprint

Dive into the research topics of 'Optimal term life insurance - A practical solution'. Together they form a unique fingerprint.

Cite this