Can the Life Insurance Market Provide Evidence for a Bequest Motive?

Abstract

Can the Life Insurance Market Provide Evidence for a Bequest Motive? Using U.K. microeconomic data, we analyze the empirical determinants of participation in the life insurance market. We \u85nd that term insurance demand is positively correlated with measures of bequest motives like being married, having children and/or subjective measures of strong bequest motives. We then show that a life-cycle model of life insurance demand, saving and portfolio choice can rationalize quantitatively the data in the presence of a bequest motive. These \u85ndings provide evidence supporting the presence of a bequest motive. JEL Classi\u85cation: E21, G11. Key Words: Portfolio choice, life insurance, bequest motive