The Wealth-Age Relation with Life Insurance

Dados Bibliográficos

ID9727578
AutoresChristopher A Pissarides (0000-0002-0695-058X, autor correspondente)
Ano1980
Volume47
Fascículo188
Páginas451
Data de publicação1980-11-01
Peer ReviewedSim
Open AccessNão
TipoARTICLE
PeriódicoEconomica (JOURNAL)
Identificadores do periódicoISSN: 0013-0427 • E-ISSN: 1468-0335
EditoraJSTOR (PUBLISHER)
DOI10.2307/2553390
OpenAlexW2088710406
IdiomaEN
Citações recebidas3
Referências citadas2

insurance. The answer to this was provided by Yaari (1965) (and confirmed in simulations by Fischer, 1973), who showed that, if individuals are uncertain about the date of their death and do not want to run the risk of dying without leaving enough provision for dependants, there will be a non-trivial demand for life insurance. Thus it may be assumed under quite general conditions that in a life-cycle model with uncertain age of death there will be two motives for saving: the usual motive of saving for retirement, and a second motive of saving for a bequest. In general we should expect the retirement motive to become more important with age (as the probability of surviving into retirement increases) and the bequest motive to become less important (as more of the consumption of dependants is financed out of their current earnings). Life insurance, as sold in the United Kingdom and other countries, is an important means of saving for retirement because it satisfies both these motives simultaneously. Since individuals usually survive to retirement, life insurance is primarily a in the sense that the individual saves a premium every month which he will receive, with interest, when he retires. The bequest motive is then satisfied by accepting a reduction in the pension, on condition that the

Actuarial science · Bequest · Consumption (sociology) · Demographic economics · Earnings · Economics · Labour economics · Life insurance · Pension · Political science · Sociology · Finance · Financial Literacy, Pension, Retirement Analysis · Insurance and Financial Risk Management · Insurance, Mortality, Demography, Risk Management · Law