Can the Life Insurance Market Provide Evidence for a Bequest Motive?

25 Pages Posted: 23 Aug 2012

See all articles by Joachim Inkmann

Joachim Inkmann

University of Melbourne - Department of Finance; Financial Research Network (FIRN)

Alexander Michaelides

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

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.

Suggested Citation

Inkmann, Joachim and Michaelides, Alexander, Can the Life Insurance Market Provide Evidence for a Bequest Motive? (September 2012). Journal of Risk and Insurance, Vol. 79, Issue 3, pp. 671-695, 2012. Available at SSRN: https://ssrn.com/abstract=2134745 or http://dx.doi.org/10.1111/j.1539-6975.2011.01455.x

Joachim Inkmann (Contact Author)

University of Melbourne - Department of Finance ( email )

Level 12, 198 Berkeley Street
University of Melbourne, Victoria 3010
Australia
0061 3 9035 8177 (Phone)

HOME PAGE: http://orcid.org/0000-0002-5526-7648

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Alexander Michaelides

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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