Life Insurance of the Elderly: Adequacy and Determinants

51 Pages Posted: 9 Jun 2004

See all articles by Alan J. Auerbach

Alan J. Auerbach

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Laurence J. Kotlikoff

Boston University - Department of Economics; National Bureau of Economic Research (NBER); Gaidar Institute for Economic Policy

Date Written: October 1985

Abstract

Despite a general reduction in poverty among the aged, roughly one third of elderly nonmarried women are officially poor. Many of these women are widows.The fact that poverty rates are significantly larger for widows than for married women suggests that many households may fail to buy sufficient life insurance.This paper considers the adequacy and determinants of life insurance among the elderly. Its principal conclusions are:(1) Combined private and public life insurance is inadequate for a significant minority of elderly households;(2) Of those elderly households in which the husband's future income representsa significant fraction of total household resources, roughly half are inadequately insured;(3) Households do not significantly offset Social Security's provision of survivor insurance by reducing their private purchase of life insurance; and(4) The actual determinants of the purchase of life insurance appear to differ greatly from those predicted by economic theory.

Suggested Citation

Auerbach, Alan Jeffrey and Kotlikoff, Laurence J., Life Insurance of the Elderly: Adequacy and Determinants (October 1985). NBER Working Paper No. w1737. Available at SSRN: https://ssrn.com/abstract=338799

Alan Jeffrey Auerbach (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Laurence J. Kotlikoff

Boston University - Department of Economics ( email )

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Boston, MA 02215
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National Bureau of Economic Research (NBER)

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United States

Gaidar Institute for Economic Policy

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Moscow, 125993
Russia

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