Can the Life Insurance Market Provide Evidence for a Bequest Motive?
46 Pages Posted: 4 Aug 2010 Last revised: 13 Aug 2010
Date Written: July 1, 2010
Using U.K. microeconomic data, we analyze the empirical determinants of participation in the life insurance market. We find that term insurance demand is positively correlated with measures of bequest motives like being married, having children and/or subjective measures of strong bequest motives. We then show that a life-cycle model of life insurance demand, saving and portfolio choice can rationalize quantitatively the data in the presence of a bequest motive. These findings provide evidence supporting the presence of a bequest motive.
Keywords: Portfolio Choice, Life Insurance, Bequest Motive
JEL Classification: E21, G11
Suggested Citation: Suggested Citation