Purchasing life insurance to reach a bequest goal

DOI10.1016/J.INSMATHECO.2014.07.003MaRDI QIDQ2513636zbMATH OpenOpenAlexFDO

Authors Erhan Bayraktar, S. David Promislow, Virginia R. Young

Publication date 28 January 2015

Published in Insurance Mathematics \& Economics (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1402.5300

zbMATH Keywords

bequest motivedeterministic controlnon-forfeiture valueterm life insurancewhole life insurance

Mathematics Subject Classification ID

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.

Recommendations

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Cites work

• ASSET ALLOCATION AND ANNUITY-PURCHASE STRATEGIES TO MINIMIZE THE PROBABILITY OF FINANCIAL RUIN
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• scientific article; zbMATH DE number 3560402 (Why is no real title available?)
• Life insurance purchasing to maximize utility of household consumption
• Maximizing the utility of consumption with commutable life annuities
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Cited in

(10)

• Purchasing casualty insurance to avoid lifetime ruin
• Life insurance, precautionary saving and contingent bequest
• Longevity risk and retirement income tax efficiency: a location spending rate puzzle
• A pair of optimal reinsurance-investment strategies in the two-sided exit framework
• Optimally investing to reach a bequest goal
• Purchasing term life insurance to reach a bequest goal while consuming
• Target-bequest investment and insurance fund
• REACHING A BEQUEST GOAL WITH LIFE INSURANCE: AMBIGUITY ABOUT THE RISKY ASSET'S DRIFT AND MORTALITY'S HAZARD RATE
• Purchasing term life insurance to reach a bequest goal: time-dependent case
• Two Stackelberg games in life insurance: mean-variance criterion

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