Abstract
This paper analyzes a market in which individuals can purchase guaranteed renewable insurance policies to insure against the risk of loss in the current period and the risk of an increased probability of loss. Individuals who cannot borrow will purchase partially guaranteed renewable insurance at most. Relatively impatient individuals may purchase policies with no guaranteed renewability features. Without borrowing, the results are similar regardless of whether consumers can save.
Similar content being viewed by others
References
Charette, Aimee. (1995) Fifty state profiles: health care reform, 1995, 4th ed. Washington D.C.: Intergovernmental Health Policy Project at the George Washington University.
Cochrane, John H. (1995). “Time-consistent health insurance,” Journal of Political Economy 103, 445–473.
Cutler, David M. (1993). “Why doesn't the market fully insure long-term care?” NBER Working Paper No. 4301.
Frick, Kevin D. (1996). Essays on health insurance markets: asymmetric information and multiple periods. Unpublished dissertation. Ann Arbor, Michigan: University of Michigan.
Kimball, Miles S. (1990). “Precautionary saving in the small and in the large,” Econometrica. 58, 53–73.
Pauly, Mark V., Kunreuther, Howard, and Hirth, Richard. (1995) “Guaranteed renewability in insurance,” Journal of Risk and Uncertainty 10, 157–179.
Pauly, Mark, Nickel, Andreas, and Kunreuther, Howard. (1997). Guaranteed renewability for group insurance. Mimeo.
Phillips, Carl. (1996). The multiple risks of health care costs and catastrophic long-term insurance. Princeton, New Jersey: Robert Wood Johnson Scholars in Health Policy Research Program, Working Paper WP-5.
Tsui FHC. (1995). Essay on the Economics of Health Insurance. Unpublished Ph.D. Dissertation. Baltimore, MD: Johns Hopkins University.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Frick, K. Consumer Capital Market Constraints and Guaranteed Renewable Insurance. Journal of Risk and Uncertainty 16, 271–278 (1998). https://doi.org/10.1023/A:1007707103908
Issue Date:
DOI: https://doi.org/10.1023/A:1007707103908