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Financial Instability and Life Insurance Demand

Author

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  • Mahito Okura

    (Faculty of Economics, Nagasaki University)

  • Norihiro Kasuga

    (Faculty of Economics, Nagasaki University)

Abstract

This paper estimates private life insurance and Kampo demand functions using household-level data provided by the Postal Services Research Institute. The results show that income, children, pension and knowledge factors have a significant effect on the decision as to whether each household purchases life insurance products. The amount of income and financial assets also appear to have significant effect on the purchase of private life insurance and Kampo. However, pension and bankruptcy experience appear only to have an impact on Kampo, while aged (less than 40) and occupation (civil servant) factors affect only private life insurance. Dummy variables representing comparison, knowledge, and bankruptcy experience did not have any significant effect on decisions concerning private life insurance. Simultaneous estimations are also used to examine why households that already have one type of life insurance product (e.g. private life insurance) purchase the other type of life insurance product (e.g. Kampo). The results indicate that income, children, and bankruptcy experience variables are not significant factors when households with private life insurance product decide to purchase additional Kampo. The results also show that a knowledge dummy has a negative impact on additional purchases.

Suggested Citation

  • Mahito Okura & Norihiro Kasuga, 2005. "Financial Instability and Life Insurance Demand," Risk and Insurance 0507002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpri:0507002
    Note: Type of Document - pdf; pages: 16
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    References listed on IDEAS

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    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. Toshiaki Tachibanaki, 1996. "Public Financing and Financial Regulations," Japanese Economy, Taylor & Francis Journals, vol. 24(5), pages 3-32.
    3. Miki Kohara, 2001. "Consumption insurance between Japanese households," Applied Economics, Taylor & Francis Journals, vol. 33(6), pages 791-800.
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    Cited by:

    1. J. François Outreville, 2011. "The relationship between insurance growth and economic development - 80 empirical papers for a review of the literature," ICER Working Papers 12-2011, ICER - International Centre for Economic Research.
    2. J. François Outreville, 2013. "The Relationship Between Insurance and Economic Development: 85 Empirical Papers for a Review of the Literature," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 16(1), pages 71-122, March.
    3. Duc De Ngo & Mahito Okura, 2008. "Coopetition in a Mixed Duopoly Market," Economics Bulletin, AccessEcon, vol. 12(21), pages 1-9.
    4. Fujii, Yoichiro & Okura, Mahito & Osaki, Yusuke, 2021. "Is insurance normal or inferior? -A regret theoretical approach-," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).

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    Keywords

    life insurance demand; financial instability; sample selection model;
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