Guaranteed renewability is a prominent feature in many health and life insurance markets. It is well established in the literature that, when there is (only) risk type uncertainty, the optimal GR contract with renewal price set at the actuarially fair price for low risk types provides full insurance against reclassification risk. We develop a model that includes unpredictable (and unobservable) fluctuations in demand for life insurance as well as changes in risk type (observable) over individuals' lifetimes. The presence of demand type heterogeneity leads to the possibility that optimal GR contracts may have a renewal price that is either above or below the actuarially fair price of the lowest risk type in the population. Individuals whose type turns out to be high risk but low demand renew more of their GR insurance than is efficient due to the attractive renewal price. This results in incomplete insurance against re-classification risk. Although a first best efficient contract is not possible in the presence of demand type heterogeneity, the presence of GR contracts nonetheless improves welfare relative to an environment with only spot markets. Our results also apply to a comparison of environments with short versus long term (front loaded) insurance contracts.

中文翻译：

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需求不确定下的保证可再生人寿保险

保证可续保是许多健康和人寿保险市场的一个突出特点。文献中已经充分证明，当存在（仅）风险类型不确定性时，续订价格为低风险类型的精算公平价格的最优 GR 合同提供了对重新分类风险的全面保险。我们开发了一个模型，其中包括人寿保险需求的不可预测（和不可观察）波动以及个人一生中风险类型（可观察）的变化。需求类型异质性的存在导致最优 GR 合同的续订价格可能高于或低于总体中风险最低类型的精算公平价格。由于具有吸引力的续订价格，那些类型为高风险但需求低的个人续订的 GR 保险比有效的要多。这导致对重新分类风险的保险不完整。尽管在存在需求类型异质性的情况下不可能出现第一个最有效的合同，但相对于只有现货市场的环境，GR 合同的存在改善了福利。我们的结果也适用于短期和长期（前置）保险合同的环境比较。