The Demand for Life Insurance Policy Loans
Andre P. Liebenberg
University of Mississippi - School of Business Administration
James M. Carson
University of Georgia
Robert E. Hoyt
University of Georgia - C. Herman and Mary Virginia Terry College of Business
July 27, 2009
Journal of Risk and Insurance, Forthcoming
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.
Number of Pages in PDF File: 25
Keywords: Life Insurance, Policy Loans, Emergency Fund Hypothesis, Survey of Consumer Finances
JEL Classification: G22, E50Accepted Paper Series
Date posted: September 27, 2007 ; Last revised: July 29, 2009
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