An Analysis of the Effect of Income on Life Insurance (original) (raw)
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The Demand for Life Insurance in OECD Countries
Journal of Risk & Insurance, 2007
This article examines the determinants of life insurance consumption in OECD countries. Consistent with previous results, we find a significant positive income elasticity of life insurance demand. Demand also increases with the number of dependents and level of education, and decreases with life expectancy and social security expenditure. The country's level of financial development and its insurance market's degree of competition appear to stimulate life insurance sales, whereas high inflation and real interest rates tend to decrease consumption. Overall, life insurance demand is better explained when the product market and socioeconomic factors are jointly considered. In addition, the use of GMM estimates helps reconcile our findings with previous puzzling results based on inconsistent OLS estimates given heteroscedasticity problems in the data.
ECONOMIC AND DEMOGRAPHIC DETERMINANTS OF THE DEMAND FOR LIFE INSURANCE: MULTIVARIATE ANALYSIS
The aim of this paper is to summarize a large number of economic and demographic determinants that are used to predict the demand for life insurance into a smaller number of component variables (components) and to determine which component has a stronger influence on demand for life insurance. Data are collected for 150 countries during the period 2005-2010. Final crosscountry database is consisted of six-year average values on variables for selected countries. The methodology includes techniques of multivariate analysis: principal component analysis (PCA) and multiple linear regression. Results show that initial determinants of demand for life insurance can be summarized into two components: economic and demographic. Both components have a statistically significant positive influence on the demand for life insurance. On the basis of standardized regression coefficients it can be concluded that economic component is stronger determinant of demand for life insurance in comparison with demographic.
2014
This study empirically verifies the link between macroeconomic and demographic variables (i.e. financial development, income, savings, price of insurance, old age dependency ratio, birth rate, death rate and urbanization) with the demand for life insurance (by sums insured) in the context of Pakistan using annual timeseries data from 1973 to 2010 of State Life Insurance Corporation of Pakistan. The basic objective of this study is to examine the following hypothesis i.e.; that financial development, gross savings, income level are directly linked while, price of insurance are inversely linked with life insurance demand and the demographic variables of crude birth rate, crude death rate, old age dependency ratio, urbanization are positively related with life insurance demand for Pakistan. For this purpose, we have used Ordinary Least Squares (OLS) and the evidences shows the significant implications on policy establishment and the managing and marketing directors of Insurance Corpora...
Drivers of life insurance consumption - an empirical analysis of Western Balkan countries
Ekonomski anali, 2021
Life insurance in the Western Balkan Countries is underdeveloped, but it has huge potential for development in the future. The scope of this article is to examine whether and how economic, socio- demographic, and institutional factors determine the demand for life insurance in the Western Balkans, using life insurance density and life insurance penetration as indicators of life insurance demand during 2006-2019. In order to conduct a crosscountry analysis we use panel data regression models and a feasible generalised least squares regression model. The analysis reveals that the most significant factors are income per capita and changes in the urban population. The article contributes to the existing literature by identifying the variables that affect demand for life insurance in the Western Balkans and by providing evidence for insurance operators, authorities, and governments of the respective countries to find ways to further develop the insurance market.
Determinants of demand for life insurance in European countries
In this study, we investigate the determinants of demand for life insurance in cross section of 31 European countries. As a result, we find that income is the central variable which affects life insurance consumption. In addition, while the impact of population and income on demand for life insurance is positive, education level and inflation affect life insurance consumption in negative way.
Life Insurance and Economic Growth Nexus: Evidence from The MENA Region
This paper conducts an empirical analysis of the relationship between life insurance market development and economic growth in the Middle East and North Africa (MENA) region. The study examines data from 15 countries over the period from 1999 to 2023. This is accomplished by employing panel unit root tests, panel cointegration inquiries and pooled mean group (PMG) estimation to uncover potential causal relationships. The results pertinently demonstrate a substantial and positive long-term relationship between the life insurance sector and economic growth in the MENA region. They reveal that there is evidence in support of supply-leading hypothesis rather than the demand-following hypothesis. This long-term connection suggests that advancements and expansions within the life insurance industry are significantly associated with, and potentially contribute to, overall economic growth in the region. Enhancing the life insurance sector may be a proactive strategy to promote economic development, rather than a reaction to economic growth. Therefore, policymakers should promote insurance literacy, establish a supportive regulatory framework and provide tax incentives so as to enhance the uptake of life insurance. Furthermore, promoting financial inclusion, deploying digital platforms, and encouraging public-private partnerships can enhance the growth of life insurance, thereby contributing to broader economic development.
Asian Development Policy Review, 2022
Life insurance is not merely vital for the economic development of a country but also the health of an individual's financial circumstances. This study examines the income elasticity of life insurance consumption and the impact of life insurance markets on economic growth in 22 Asian countries from 2001 to 2016. According to a panel data analysis of life insurance demand, it is inelastic in proportion to GDP per capita, implying that the product is a necessity for Asians. Furthermore, the results of a life insurance growth analysis conducted both before and after the 2007/2008 subprime crisis revealed that life insurance markets had a significant impact on economic growth. The findings showed the region's life insurance industry was hit hard by the crisis and shed more than 10% of its market value relative to the economy. This work provides a valuable reference and recommendations for corporations and government sectors to strengthen these countries' life insurance markets. Contribution/ Originality: This study contributes to the existing literature by determining whether life insurance is considered a necessity or a luxury by Asians. By disaggregating the pre-and post-global financial crisis, the study explores the impact of the life insurance market on economic growth during Asia's truly diverse socioeconomic development.
Determinants of Life Insurance Demand in Tunisia
African Development Review, 2017
This paper investigates the variables driving the demand for life insurance in Tunisia based on annual macroeconomic data spanning the period from 1990 to 2014 and collected from the Swiss Reinsurance company and the World Bank's databases. We provide a characterization of the Tunisian life insurance sector and a comparison to some emerging markets. Empirical results show that life insurance demand increases with income and financial development. However, other economic variables such as inflation and interest rate do not seem to influence life insurance consumption in Tunisia. Socio-demographic variables such as dependency, life expectancy at birth and the country's level of urbanization stimulate life insurance demand, while the level of education dampens it. Finally, pension expenditures have a negative effect on life insurance consumption confirming the substitution by social security system for private insurance.
Ageing and the demand for life insurance: an empirical investigation using french panel data
2003
The age structure of the French population has been experiencing dramatic changes over the past decades and is likely to do so in a near future. The increasing proportion of elder people may modify the saving behaviour of French households. The level of saving, as well as its composition, may be altered by ageing of the French population. This paper investigates the relationship between age structure and the demand for life insurance products using an econometric estimation of French survey data (Patrimoine 1998 of the National Institute of Statistics and Economic Studies (INSEE)). More precisely, we try to identify the significant demographic, economic and financial factors influencing this demand (age, income, household wealth, marital status, occupational status and education…). Following a methodology developed in a companion article, this paper begins with a characterisation of household accumulation profile in France. The paper then estimates a Probit model to exhibit the determinants of the probability of life insurance holding, and an ordinary least squares procedure to explain the amount of wealth held in life insurance, according to the previously identified significant variables. The results suggest a robust relationship between demographic structure and the demand for life insurance.