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Funeral insurance

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  • Erlend Berg

Abstract

Funeral insurance has existed at least since antiquity, and it remains popular in many parts of Africa today. Yet the study of funeral insurance as a distinct form of insurance has hitherto been neglected. This paper presents a model in which funeral insurance combines regular life insurance with a restriction on how the payout is spent. The model predicts that there is an intermediate range of income and wealth where funeral insurance is demanded. The prediction is tested on a nationally representative sample of black South African households, a setting where both life and funeral insurance are widely available. The model also gives conditions under which funeral insurance is not demanded at any level of income and wealth. This may explain why funeral insurance is less popular in developed countries, even among the relatively poor.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2011-16.

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Date of creation: 2011
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Handle: RePEc:csa:wpaper:2011-16

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  1. J. Bryant & A. Prohmmo, 2002. "Equal Contributions and Unequal Risks in a North-east Thai Village Funeral Society," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 38(3), pages 63-75.
  2. Francis Bloch (GREQAM and Universite de la Mediterranee), Garance Genicot (Georgetown University, and Debraj Ray (New York University and Instituto de Analisis Economico (CSIC)), 2004. "Informal Insurance in Social Networks," Working Papers, Georgetown University, Department of Economics gueconwpa~04-04-16, Georgetown University, Department of Economics.
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  6. Fafchamps, Marcel & Lund, Susan, 2003. "Risk-sharing networks in rural Philippines," Journal of Development Economics, Elsevier, Elsevier, vol. 71(2), pages 261-287, August.
  7. Bernheim, B Douglas, 1991. "How Strong Are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(5), pages 899-927, October.
  8. Dercon, Stefan & De Weerdt, Joachim & Bold, Tessa & Pankhurst, Alula, 2006. "Group-based funeral insurance in Ethiopia and Tanzania," World Development, Elsevier, Elsevier, vol. 34(4), pages 685-703, April.
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  12. Levenson, Alec R. & Besley, Timothy, 1996. "The anatomy of an informal financial market: Rosca participation in Taiwan," Journal of Development Economics, Elsevier, Elsevier, vol. 51(1), pages 45-68, October.
  13. Mathias Dewatripont & Lars Peter Hansen & Stephen Turnovsky, 2003. "Advances in economics and econometrics: the eighth world congress," ULB Institutional Repository, ULB -- Universite Libre de Bruxelles 2013/9557, ULB -- Universite Libre de Bruxelles.
  14. Cally Ardington & Murray Leibbrandt, 2004. "Financial Services and the Informal Economy," SALDRU/CSSR Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 066, Southern Africa Labour and Development Research Unit, University of Cape Town.
  15. Stephen P. King, 2000. "Introduction," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(1), pages 65-66.
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  1. Why is funeral insurance so popular in Africa?
    by Economic Logician in Economic Logic on 2011-11-08 16:41:00

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