Existing models of foreign debt and insurance capacity assume that the costs and benefits of default are evenly distributed across agents in the defaulting country. To study how tensions among different groups inside a country affect its sovereign risk management I consider an economy whose agents differ in their life spans. This makes the costs and benefits of default to be different across generations. The country is able to come up with a positive level of insurance or debt by linking intergenerational transfers to the default decision of the agents. This result is found both for the case of a benevolent social planner, and for the case of a political process where decisions are taken each period by majority vote of living generations.