Abstract
The purpose of this study is to analyse, for men and women, the microeconomic determinants of life insurance purchases. Indeed, only a few papers have tried to justify rigorously the gender-based differences in life insurance ownership. On the basis of survey data collected by the Bank of Italy in 2012 (the Survey on Income and Households), we estimate the propensity to buy and the willingness to pay for a life insurance contract. We examine the differences between two types of contracts, that is, traditional life and term life insurance and show that, in all cases, women are less likely to be insured than are men. The demand for insurance is highly correlated with income, family structure and employment status. Geographical variables within Italy significantly affect the demand too. We introduce novel variables that measure the financial status of households and their proximity to the financial market or, similarly, their familiarity with financial market opportunities. These determinants turn out to be significant and affect demand almost as much as traditional variables. To study policy implications, we calculate the probabilities of having either traditional life or term insurance, under several scenarios for the determinants of demand. Again, financial market proximity plays a key role.
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Notes
Auerbach and Kotlikoff (1991) find that somewhere between 30 and 40 per cent of middle-aged American wives in need of life insurance protection are poorly insured.
See Outreville (2013) for a survey.
See Zietz (2003) for a survey.
See Hanewald and Kluge (2014) for a recent study.
See Outreville (2014).
Yaari (1964 and 1965).
See Lewis (1989), Outreville (1996) and Beck and Webb (2003), among others.
Guiso and Paiella (2006 and 2008).
The question RISKFIN used is the following: “In managing your financial investments, would you say you have a preference for investments that offer”: (1) a very high returns, but with a high risk of losing part of the capital; (2) a good return, but also a fair degree of losing part of the invested capital; (3) a fair return, with a good degree of protection for the invested capital; (4) low returns, with no risk of losing the invested capital.
See Outreville (2015).
Fitzgerald (1989) suggests that the demand for life insurance depends on the relative age of husband and wife and introduces a quadratic function of age and the difference between the husband’s and the wife’s ages. This information is unfortunately not available in the survey.
We do not distinguish between households in which the man or the woman has the highest income of the household. Non-monetised aspects of household participation are not captured in the survey and are very often provided by women.
See Prast et al. (2015).
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Acknowledgements
The authors are grateful to Federico Petri for constructive research assistantship on the first drafts of the paper and acknowledge financial support from Collegio Carlo Alberto.
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Luciano, E., Outreville, J. & Rossi, M. Life Insurance Ownership by Italian Households: A Gender-Based Differences Analysis. Geneva Pap Risk Insur Issues Pract 41, 468–490 (2016). https://doi.org/10.1057/gpp.2016.7
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DOI: https://doi.org/10.1057/gpp.2016.7