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arxiv: 1503.02237 · v1 · pith:G3D5KXRAnew · submitted 2015-03-08 · 💱 q-fin.MF · q-fin.PM

Purchasing Term Life Insurance to Reach a Bequest Goal: Time-Dependent Case

classification 💱 q-fin.MF q-fin.PM
keywords insurancelifeproblemtermbequestgoalindividualallow
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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.

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