| Sumario: | This article develops a heterogeneous agents model to analyze the effects of Social Security survivors insurance. The model features a negative mortality–income gradient, asymmetric information of individual mortality rates, and a warm‐glow bequest motive that varies by age and family structure. The model matches life‐cycle changes in life insurance coverage and generates advantageous selection in the insurance market. For male agents, reducing survivors benefits for dependent children generates welfare losses, whereas reducing survivors benefits for aged spouses produces welfare gains. The opposing welfare results are explained by differences in the timing of benefits and in the funding cost.
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