Life Insurance Holdings in the Great Recession: Examining the Impact of Changes in Household Structure, Financial Position, and Risk Aversion on the Decision to Purchase or Drop Coverage

Author (Your Name)

Clare Peaslee, Colby College

Date of Award

2014

Document Type

Honors Thesis (Colby Access Only)

Department

Colby College. Economics Dept.

Advisor(s)

Michael Donihue

Second Advisor

Samara R. Gunter

Abstract

Using panel data from the 2007-09 Survey of Consumer Finances, this research explores channels through which the Great Recession affected households’ demand for life insurance policies. Existing literature suggests that the economic downturn induced changes in insurance coverage due to both financial and psychological shocks. This paper utilizes Probit regressions with differenced explanatory variables to analyze whether changes in household structure, economic stability, and financial risk aversion caused households to drop or purchase life policies. My results indicate that the Great Recession impacted life insurance demand in the U.S. through the deterioration of household financial status and increases in unemployment. The most novel contribution of this research is the significant positive relationship the results show between increases in risk aversion and the decision to drop life insurance coverage.

Comments

Full-text download is restricted to Colby College.

Keywords

life insurance, Great Recession, U.S., risk aversion

Recommended Citation

Peaslee, Clare, "Life Insurance Holdings in the Great Recession: Examining the Impact of Changes in Household Structure, Financial Position, and Risk Aversion on the Decision to Purchase or Drop Coverage" (2014). Honors Theses. Paper 877.
https://digitalcommons.colby.edu/honorstheses/877