Age, Period, and Cohort Effects on Life Insurance Purchases in the U.S.

177

106

The objective of this article is to propose a review of 85 empirical papers examining the relationships between insurance and economic development, that is, the insurance‐growth nexus. When looking at the economic importance of the insurance sector, most papers in the past have looked at the demand side (the level of economic development is an explanatory variable among other factors that affect the demand for insurance). Because the role of the insurance sector and its contribution to development is at the agenda of international organizations and because the importance of the relationship between financial development and economic growth has been well recognized and emphasized in the field of economic development, more recent papers have examined the causality links between insurance and economic development and the role of insurance as a significant determinant in the process of economic growth.

“…et al, 2000). For example, Truett and Truett (1990) and Chen et al (2001) conclude that age distribution of the population positively affects the demand for life insurance.…”

Section: Demographic Factorsmentioning

confidence: 99%

The Relationship Between Insurance and Economic Development: 85 Empirical Papers for a Review of the Literature

Outreville

2012

177

106

“…Showers and Shotick (1994) discovered a relationship between marginal changes in household characteristics and life insurance purchase. Chen, Wong, and Lee (2001) then employed cohort analysis to reveal the effect of demographic patterns on the purchase of life insurance. Zietz (2003) broadly reviewed key economic, financial, and demographic factors influencing the demand for life insurance.…”

Section: Literature Reviewmentioning

confidence: 99%

A Cross‐Section Analysis of the Determinants of Life Insurance Consumption in Mainland China, Hong Kong, and Taiwan

Hwang¹,

Greenford²

2005

This study examines some of the key factors affecting life insurance consumption in mainland China, Hong Kong, and Taiwan. It also attempts to gain an understanding of the different characteristics of the market in life insurance in each territory. Income and life insurance consumption are found to be strongly correlated, which is consistent with previous studies. Education is a significant factor. Price is found to be insignificant, largely conflicting with previous studies. Levels of social security are not significantly related. The one-child policy in mainland China has a negative effect on life insurance consumption. Differences in the level of economic development reveal a variation in life insurance consumption. Generally, the more advanced the economy, the greater the life insurance consumption. However, mainland China, which is a low-income country, shows the greatest potential.

“…Outreville () shows that the United States, along with other leading insurance countries like Switzerland and the United Kingdom, indicated a recent decline of insurance penetration (ratio of direct premiums written to GDP) between 2000 and 2010. Chen et al () find a reduction in the purchase of life insurance in the United States between 1940 and 1996, especially among younger households. They speculate that the higher share of single households and the trend toward later marriages and resulting later childbirths are the leading causes of the decline.…”

Section: Introductionmentioning

confidence: 99%

“…Table 1 shows not only the decrease in overall life insurance, but the ongoing trend over the past 25 years of face amount coverage shifting from cash value to term life insurance. The popular press and some life insurance demand literature suggest the changing demand is driven mainly by changing demographics and changes in timing of family formation (Chen et al, 2001). Michael Finke is at the College of Human Sciences, Texas Tech University Lubbock, TX; e-mail: Michael.finke@ttu.edu.…”

Section: Introductionmentioning

confidence: 99%

Understanding the Shift in Demand for Cash Value Life Insurance

Mulholland

Finke

Huston

2015

Ownership of cash value life insurance in the United States has fallen in recent decades. Changes in age cohorts, family composition, and tax laws may have contributed to this decline. We identify factors that influence the demand for cash value life insurance and test whether they alone can explain the sharp decline in ownership. Demographic and tax code changes do not explain the decrease in permanent insurance. There is a consistent downward trend in demand from 1992 to 2010—particularly among middle‐age and younger households. The fewer households who own cash value policies are on average wealthier and more financially sophisticated, suggesting that permanent life insurance is increasingly being used as a tax shield rather than as a hedge against a loss in human capital.