Operations Management and Econometrics

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

Professor Joachim Inkmann, The University of Melbourne

3rd Sep 2010  11:00 am - Room 498, Merewether Building

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.

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