Numerous investigations have been directed toward aspects of rational life insurance purchases and optimal coverage levels under differing conditions. Most of these studies have taken as “given” the design of life insurance contracts and have focused on optimal consumer responses to available insurance opportunities.Footnote 1 However, in works by Borch (1960, 1983), Arrow (1963, 1974) and Raviv (1979), contract design has been considered explicitly, yet in none of these studies has the focus been on life insurance; rather, general property and liability insurance received attention.