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The Demand for Life Insurance Policy Loans
Andre P. Liebenberg University of Mississippi - School of Business Administration James M. Carson Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law Robert E. Hoyt University of Georgia - C. Herman and Mary Virginia Terry College of Business Journal of Risk and Insurance, Forthcoming Abstract: Previous research has examined the demand for life insurance policy loans using aggregate policy loan data. In contrast, we use a detailed household survey dataset containing life insurance and policy loan information to alternatively, and in some cases more directly, examine the four hypotheses traditionally associated with policy loan demand. Our research provides the first U.S. evidence (in the post-World War II period) in support of the policy loan emergency fund hypothesis. In particular, we find that the more detailed emergency fund proxies used here reveal a significantly positive relation between loan demand and recent expense or income shocks.
Keywords: Life Insurance, Policy Loans, Emergency Fund Hypothesis, Survey of Consumer Finances JEL Classifications: G22, E50 Accepted Paper SeriesDate posted: September 27, 2007 ; Last revised: July 29, 2009Suggested CitationContact Information
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