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Funeral insurance

  • Erlend Berg

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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File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/csae-wps-2011-16.pdf
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2011-16.

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Date of creation: 01 Sep 2011
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Handle: RePEc:oxf:wpaper:wps/2011-16
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  1. 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.
  2. Bloch, Francis & Genicot, Garance & Ray, Debraj, 2008. "Informal insurance in social networks," Journal of Economic Theory, Elsevier, vol. 143(1), pages 36-58, November.
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  5. 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.
  6. 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.
  7. 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.
  8. Stefan Dercon & Tessa Bold, 2004. "Group-based Funeral Insurance in Ethiopia and Tanzania," Economics Series Working Papers WPS/2004-27, University of Oxford, Department of Economics.
  9. 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, vol. 99(5), pages 899-927, October.
  10. Stefan Dercon, 2000. "Income risk, coping strategies and safety nets," Economics Series Working Papers WPS/2000-26, University of Oxford, Department of Economics.
  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. 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.
  13. 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.
  14. 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.
  15. Lewis, Frank D, 1989. "Dependents and the Demand for Life Insurance," American Economic Review, American Economic Association, vol. 79(3), pages 452-67, June.
  16. Timothy Besley, 1995. "Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 115-127, Summer.
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