The determinants of life insurance demand in Philippine households
Date
2016-06
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Abstract
The market for life insurance is a major institution of the financial sector, with the
ability to provide various financial services and investment opportunities for consumers.
The factors governing why people choose to invest in insurance remain indistinct.This
paper seeks to identify the determinants of the demand of life insurance, through life
insurance premiums, in Philippine households. In particular, it examines the expenditures
of the households and its effects on a family’s desire to have an insurance coverage. Our
test on a cross-sectional data from 2009 PH Family Income and Expenditures Survey
asserts that households which have more medical and human capital investments demand
more insurance. Specifically, households with an income of approximately Php 126,000
and above were seen to have significant insurance consumption. The research also shows
that the household type, household heads’ occupations, and age are all robust predictors
of life insurance demand. Media exposure and smoking appears to have minimal effects
on a household’s decision whether to purchase life insurance products or not.These are
consistent with the results established using GLS, FE and RE methods. We also found out
that families obtain insurance coverage generally through participation in the labor force.
In addition, high dependency ratios and increased wealth and revenues received by the
households make them more risk averse. Political and economic stability contribute to
strengthening the insurance consumption for a certain populace.It is recommended that
future studies focus on the different cultural factors that may possibly influence the
households’ saving motives as well as their preferences for healthcare investments.
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Keywords
Life insurance, Life insurance Demand, Investments, Philippine Households