Life insurance companies tend to invest in long-term assets such as loans to manufacturing firms to build factories or to real estate developers to build shopping malls and skyscrapers. Auto insurers tend to invest in short-term assets such as Treasury bills. What accounts for these differences? ___ generally need to have funds readily available when a policyholder makes a claim, and Treasury bills are highly liquid. ___ have liabilities with a much longer horizon. ___ is expected to pay off in 30 years, say, so that assets with ___ horizons correspond to their ___ liabilities. In general, insurers can limit their risks by matching the terms of their liabilities with the terms of their assets.
automobile insurers life insurance companies a life insurance policy longer longer-term
automobile insurers
life insurance companies
a life insurance policy
longer
longer-term