Villeneuve, Bertrand (2000), Life Insurance, in Dionne, Georges, Handbook of Insurance, Kluwer Academic Publishers : Boston, p. 901-932
Book titleHandbook of Insurance
Book authorDionne, Georges
Kluwer Academic Publishers
Number of pages974
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Abstract (EN)This survey reviews the micro-economic foundations of the analysis of life insurance markets. The ﬁrst part outlines a simple theory of insurance needs based on the life-cycle hypothesis. The second part builds on contract theory to expose the main issues in life insurance design within a unified framework. We investigate how much flexibility is desirable. Flexibility is needed to accommodate changing tastes and objectives, but it also gives way to opportunistic behaviors from the part of the insurers and the insured. Many typical features of actual life insurance contracts can be considered the equilibrium outcome of this trade-off.
Subjects / Keywordslife insurance; life cycle; flexibility; insurance contracts
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