This study examines life insurance holdings and financial vulnerabilities among couples approaching retirement age. Two separate concerns motivate our analysis. First, there are reasons to suspect that life insurance coverage may be poorly correlated with underlying financial vulnerabilities. A well-known insurance industry adage holds that life insurance is “sold and not bought.” Alternatively, households may purchase long-term policies relatively early in life, and subsequently fail to adjust coverage appropriately because of inertia and/or other psychological considerations. Second, households that purchase little or no life insurance may leave either or both spouses at risk of serious financial consequences.
The Mismatch Between Life Insurance Holdings and Financial Vulnerabilities: Evidence from the Health and Retirement Study
FORNI, LORENZO;
2003
Abstract
This study examines life insurance holdings and financial vulnerabilities among couples approaching retirement age. Two separate concerns motivate our analysis. First, there are reasons to suspect that life insurance coverage may be poorly correlated with underlying financial vulnerabilities. A well-known insurance industry adage holds that life insurance is “sold and not bought.” Alternatively, households may purchase long-term policies relatively early in life, and subsequently fail to adjust coverage appropriately because of inertia and/or other psychological considerations. Second, households that purchase little or no life insurance may leave either or both spouses at risk of serious financial consequences.Pubblicazioni consigliate
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