Purchasing Term Life Insurance to Reach a Bequest Goal: Time-Dependent Case
Mathematical Finance
2015-03-10 v1 Portfolio Management
Abstract
We consider the problem of how an individual can use term life insurance to maximize the probability of reaching a given bequest goal, an important problem in financial planning. We assume that the individual buys instantaneous term life insurance with a premium payable continuously. By contrast with Bayraktar et al. (2014), we allow the force of mortality to vary with time, which, as we show, greatly complicates the problem.
Keywords
Cite
@article{arxiv.1503.02237,
title = {Purchasing Term Life Insurance to Reach a Bequest Goal: Time-Dependent Case},
author = {Erhan Bayraktar and Virginia R. Young and David Promislow},
journal= {arXiv preprint arXiv:1503.02237},
year = {2015}
}
Comments
To appear in North American Actuarial Journal. Keywords: Term life insurance, bequest motive, deterministic control. arXiv admin note: text overlap with arXiv:1402.5300