The Effects of Risk Aversion on Life Insurance Ownership of Single-Parent Households

Abstract

This study investigates the effect of risk aversion of single-parent households with at least one child under 18 on life insurance ownership. Analyzing the 1992-2013 Survey of Consumer Finances datasets, we found that the likelihood of owning term life insurance decreases as risk aversion increases, but the likelihood of owning cash-value life insurance increases as risk aversion increases. Smokers were less likely to own term life insurance but more likely to own cash-value life insurance than comparable non-smokers.

Keywords: Life Insurance, Risk Aversion, Investments, Single-Parent Household

JEL Classification: D12, D14, G22, J12