Kelly, Paul S.
October 1994
Journal of Financial Planning;Oct94, Vol. 7 Issue 4, p160
Academic Journal
This paper describes a way to make financial decisions when the results of different actions are uncertain. It provides an approach for selecting the premium to fund a vanishing-premium life insurance plan, which depends on estimates of future policy earnings and the time of death. It argues that probabilistic estimates represent unknown values better than point estimates, and that the risk profile of a decision provides more useful information than single-value results. Finally, it describes how planners can apply the probabilistic approach using computer simulation.


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