Funeral insurance has existed at least since antiguity, 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 representiatve 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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