Purchasing life insurance to reach a bequest goal
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Publication:2513636
DOI10.1016/J.INSMATHECO.2014.07.003zbMATH Open1304.91091arXiv1402.5300OpenAlexW3122029151MaRDI QIDQ2513636FDOQ2513636
Virginia R. Young, Erhan Bayraktar, S. David Promislow
Publication date: 28 January 2015
Published in: Insurance Mathematics \& Economics (Search for Journal in Brave)
Abstract: We determine how an individual can use life insurance to meet a bequest goal. We assume that the individual's consumption is met by an income, such as a pension, life annuity, or Social Security. Then, we consider the wealth that the individual wants to devote towards heirs (separate from any wealth related to the afore-mentioned income) and find the optimal strategy for buying life insurance to maximize the probability of reaching a given bequest goal. We consider life insurance purchased by a single premium, with and without cash value available. We also consider irreversible and reversible life insurance purchased by a continuously paid premium; one can view the latter as (instantaneous) term life insurance.
Full work available at URL: https://arxiv.org/abs/1402.5300
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Cited In (7)
- Purchasing Term Life Insurance to Reach a Bequest Goal: Time-Dependent Case
- Purchasing term life insurance to reach a bequest goal while consuming
- A pair of optimal reinsurance-investment strategies in the two-sided exit framework
- Longevity risk and retirement income tax efficiency: a location spending rate puzzle
- Purchasing casualty insurance to avoid lifetime ruin
- Life insurance, precautionary saving and contingent bequest
- REACHING A BEQUEST GOAL WITH LIFE INSURANCE: AMBIGUITY ABOUT THE RISKY ASSET'S DRIFT AND MORTALITY'S HAZARD RATE
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