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Purpose The purpose of this paper is to analyze the macroeconomic determinants of life insurance demand in India. The recent decline in life insurance activity calls for a study on the factors influencing life insurance demand in India. Design/methodology/approach This study employs econometric techniques like augmented Dickey-Fuller test, Johansen cointegration test, vector error correction models and the Granger causality test to estimate the macroeconomic predictors of life insurance demand in India, during the period 1980-1981 to 2013-2014. Findings Financial sector development and inflation positively influence life insurance demand in India. The real rate of interest and income are negatively related to life insurance consumption. The study finds an insignificant relation between the level of social security expenditure and life insurance buying. Financial sector development is found to Granger-cause life insurance demand. Research limitations/implications Product-wise analysis of life insurance demand is not attempted due to lack of unit-level data. The impact of regulatory changes on life insurance demand in India is not attempted. Practical implications Intervention by the policy makers is required to arrest the decline of life insurance activity in India. Efforts are required to widen the financial sector of the Indian economy to accelerate the growth of life insurance activity. Originality/value The paper introduces a new measure of life insurance demand, the total regular new business premium, in the estimation of life insurance demand determination.

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PurposeThis paper analyses the relationship between financial sector development (FSD) and life insurance inclusion in India during the period from 1971–1972 to 2016–2017. The study analyses the effect of financial deepening on life insurance inclusion in India.Design/methodology/approachThe study employs augmented Dickey–Fuller (ADF) unit roots test to check the stationarity properties of the time series data. It estimates a life insurance inclusion model using the auto-regressive distributed lag model (ARDL) bounds testing approach to cointegration.FindingsThe study finds evidence of a cointegrating relationship between financial deepening and life insurance inclusion in India. A significant error correction coefficient indicates automatic adjustments to short-run disequilibrium, reinforcing the cointegrating relationship between financial sector and life insurance inclusion.Research limitations/implicationsA major limitation of the study is that it excludes the first-time sum assured (FSA) contributed by the private sector life insurance companies due to lack of data availability.Practical implicationsThe results of the study call for faster expansion of the financial sector and provision of a low interest rate regime in the Indian economy. The study invokes the need for sufficient training to the personnel in the banking and non-banking institutions to cater to the complex needs of life insurance buyers.Originality/valueThe paper estimates the link between FSD and life insurance inclusion and introduces a new measure of life insurance demand, the life insurance inclusion, measured using the FSA.