Multi-period optimization model for a household, and optimal insurance design

We discuss an optimization model to obtain an optimal investment and insurance strategy for a household. In this paper, we extend the studies in Hibiki and Komoribayashi (2006). We introduce the following points, and examine the model with numerical examples. 1 We consider cash flow due to a serious disease and involve medical insurance. 2 An optimization model is formulated with term life insurance which variable insurance money is received. 3 We propose a model to decide optimal life and medical insurance money received at each time. 4 Sampling error is examined with 100 kinds of 5,000 sample paths.