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Dependents and the Demand for Life Insurance

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  • Lewis, Frank D

Abstract

A breadwinner's demand for life insurance depends on the demographic structure of his or her household. The author captures the relationship by extending Menahem E. Yaari's life insurance framework to include the preferences of all household members explicitly. In many households, the insured is the husband and the beneficiaries are his wife and offspring. Their demand for insurance of the husband's life is derived from a life cycle model in which income is uncertain. The results are intuitively appealing in that they describe the explicit calculation made by purchasers of life insurance. Empirical estimates based on observed life insurance ownership also are encouraging. Copyright 1989 by American Economic Association.

Suggested Citation

  • Lewis, Frank D, 1989. "Dependents and the Demand for Life Insurance," American Economic Review, American Economic Association, vol. 79(3), pages 452-467, June.
  • Handle: RePEc:aea:aecrev:v:79:y:1989:i:3:p:452-67
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    References listed on IDEAS

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    1. Parsons, Donald O, 1980. "The Decline in Male Labor Force Participation," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 117-134, February.
    2. Michael Grossman, 1976. "The Correlation between Health and Schooling," NBER Chapters,in: Household Production and Consumption, pages 147-224 National Bureau of Economic Research, Inc.
    3. Jonathan S. Leonard, 1979. "The Social Security Disability Program and Labor Force Participation," NBER Working Papers 0392, National Bureau of Economic Research, Inc.
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