Life insurance, precautionary saving and contingent bequest

We present a model of life-insurance purchase that takes into account the age of the beneficiary. The beneficiaries considered herein are young children with no resources whose consumption needs are protected by purchasing life insurance if the breadwinner dies. We show that income transfer grows as the child ages; however, the size of contingent bequest shrinks because the need for protection diminishes. Consequently, among the beneficiaries, the younger one would receive a larger bequest. The aggregate demand for life insurance is positively related to the number of children, their consumption needs, and the length of time to independence. JEL classification: G22, D91