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Chang, Fwu-Ranq
Year of Publication: 
Series/Report no.: 
CESifo Working Paper 444
Purchasing life insurance is for the welfare of young children, par-ticularly preteens, who are liquidity constrained. In this paper, we present a life cycle model of life insurance that takes into account the ages of these young beneciaries. We show that, as the child ages, the need for protection is reduced and, consequently, the size of contingent bequest may shrink. The demand for life insurance is positively related to the number, age differentials, living standards, and the time needed to reach adulthood. Also, the breadwinner's life-time uncertainty and the unfairness of the insurance market encourage precautionary saving.
Loading factor
birth order
actuarial rate of interest
and the age of independence
Document Type: 
Working Paper

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