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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, vol. 38(3), pages 63-75.
  2. Marcel Fafchamps & Susan Lund, . "Risk Sharing Networks in Rural Philippines," Working Papers 97014, Stanford University, Department of Economics.
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  7. Levenson, Alec R. & Besley, Timothy, 1996. "The anatomy of an informal financial market: Rosca participation in Taiwan," Journal of Development Economics, Elsevier, vol. 51(1), pages 45-68, October.
  8. Cally Ardington & Murray Leibbrandt, 2004. "Financial Services and the Informal Economy," SALDRU/CSSR Working Papers 066, Southern Africa Labour and Development Research Unit, University of Cape Town.
  9. Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, vol. 81(1), pages 179-90, March.
  10. Stefan Dercon & Tessa Bold & Joachim De Weerdt & Alula Pankhurst, 2004. "Group-based Funeral Insurance in Ethiopia and Tanzania," CSAE Working Paper Series 2004-27, Centre for the Study of African Economies, University of Oxford.
  11. Johnson, Paul A, 1985. "The Economics of Old Age in Britain: A Long-Run View, 1881-1981," CEPR Discussion Papers 47, C.E.P.R. Discussion Papers.
  12. Ligon, Ethan & Thomas, Jonathan P & Worrall, Tim, 2002. "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies," Review of Economic Studies, Wiley Blackwell, vol. 69(1), pages 209-44, January.
  13. Nava Ashraf & Dean Karlan & Wesley Yin, 2006. "Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 635-672, May.
  14. Stephen P. King, 2000. "Introduction," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(1), pages 65-66.
  15. Mathias Dewatripont & Lars Peter Hansen & Stephen Turnovsky, 2003. "Advances in economics and econometrics: the eighth world congress," ULB Institutional Repository 2013/9557, ULB -- Universite Libre de Bruxelles.
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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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