In this paper, we extend the inter-temporal consumption model of Yaari in an asymmetricframework with market incompleteness, where agents can only take a long position in lifeinsurance. We study consumption and saving behaviour in the presence of voluntarybequest concerns and term life insurance that can not be resold in the context of lifeexpectancy uncertainty. We provide general insights that do not depend on specificforms of the utility function and risk aversion hypotheses. In particular, our resultssuggest that such policy leads to variable optimal consumption over time that is stillaffected by lifetime uncertainty.
Life-cycle Consumption in the Presence ofa Term Life Insurance, Voluntary, AltruisticBequest, and Uncertain Life Span
Giuseppe Di Liddo
;Fabrizio Striani
2022-01-01
Abstract
In this paper, we extend the inter-temporal consumption model of Yaari in an asymmetricframework with market incompleteness, where agents can only take a long position in lifeinsurance. We study consumption and saving behaviour in the presence of voluntarybequest concerns and term life insurance that can not be resold in the context of lifeexpectancy uncertainty. We provide general insights that do not depend on specificforms of the utility function and risk aversion hypotheses. In particular, our resultssuggest that such policy leads to variable optimal consumption over time that is stillaffected by lifetime uncertainty.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
