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Are Life Insurance Holdings Related to Financial Vulnerabilities?
Author(s) -
Bernheim B. Douglas,
Carman Katherine Grace,
Gokhale Jagadeesh,
Kotlikoff Laurence J.
Publication year - 2003
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbg026
Subject(s) - vulnerability (computing) , life insurance , actuarial science , uncorrelated , economics , business , demographic economics , statistics , computer security , mathematics , computer science
Using the 1995 Survey of Consumer Finances and an elaborate life‐cycle model, we quantify the potential financial impact of each individual's death on his or her survivors and measure the degree to which life insurance moderates these consequences. Life insurance is essentially uncorrelated with financial vulnerability at every stage of the life cycle. As a result, the impact of insurance among at‐risk households is modest, and substantial uninsured vulnerabilities are widespread, particularly among younger couples. We also identify a systematic gender bias: For any given level of financial vulnerability, couples provide significantly more protection for wives than for husbands. (JEL D10 , G22 )