Risk Preferences Necessary to Choose Life Insurance Funding of Buy-Sell Arrangements

Loren W. Tauer

No 185998, Staff Papers from Cornell University, Department of Applied Economics and Management

Abstract: Pratt-Arrow risk aversion coefficients are derived such that term life insurance funding of buy-sell arrangements is preferred by decision makers with risk preferences greater than those breakeven coefficients. Given previous estimates of farmers' risk preferences, anything greater than a 25 percent loading of actuarially fair premiums would discourage life insurance funding.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 17
Date: 1985-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudasp:185998

DOI: 10.22004/ag.econ.185998

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