Policyholder Exercise Behavior in Life Insurance: The State of Affairs

42 Pages Posted: 5 Mar 2021

See all articles by Daniel Bauer

Daniel Bauer

University of Wisconsin-Madison

Thorsten Moenig

Temple University, Department of Risk, Insurance & Healthcare Management

Eric R. Ulm

University of Central Florida - Department of Statistics and Actuarial Sciences

Nan Zhu

Pennsylvania State University - Smeal College of Business

Date Written: March 4, 2021

Abstract

The paper presents a review of structural models of policyholder behavior in life insurance. We first discuss underlying drivers of policyholder behavior in theory and survey the implications of different models. We then turn to empirical behavior and appraise how well different drivers explain observations. The key contributions lie in the synthesis and the systematic categorization of different approaches. The paper should provide a foundation for future studies, and we describe some important directions for future research in the conclusion.

Keywords: Optimal Exercise Behavior, Market Imperfections, Guaranteed Minimum Benefits, Life Settlements.

Suggested Citation

Bauer, Daniel and Moenig, Thorsten and Ulm, Eric R. and Zhu, Nan, Policyholder Exercise Behavior in Life Insurance: The State of Affairs (March 4, 2021). Available at SSRN: https://ssrn.com/abstract=3798003 or http://dx.doi.org/10.2139/ssrn.3798003

Daniel Bauer (Contact Author)

University of Wisconsin-Madison ( email )

975 University Avenue
Madison, WI 53706
United States

Thorsten Moenig

Temple University, Department of Risk, Insurance & Healthcare Management ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

Eric R. Ulm

University of Central Florida - Department of Statistics and Actuarial Sciences ( email )

Orlando, FL 32816
United States
407-882-0073 (Phone)

HOME PAGE: http://www.cas.ucf.edu/statistics/AARC2004/ulm.htm

Nan Zhu

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
119
Abstract Views
599
Rank
422,206
PlumX Metrics