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The Non-Monotonic Relationship Between Income and Life Insurance Demand: A Case Study of Forty-One Countries

Author

Listed:
  • Kristio Rapi

    (School of Business, IPB University, Bogor 16128, Indonesia)

  • Dominicus S. Priyarsono

    (Department of Economics, IPB University, Bogor 16680, Indonesia)

  • Siti Jahroh

    (School of Business, IPB University, Bogor 16128, Indonesia)

  • Toni Bakhtiar

    (Department of Mathematics, IPB University, Bogor 16680, Indonesia)

Abstract

Income is often viewed as the main determinant of life insurance demand. However, in the last two decades, the world’s life insurance penetration has continued to decrease even as income grows. This study investigates the relationship between income and life insurance demand using panel data from forty-one countries from 2013 to 2022, along with education and life expectancy as control variables. The study finds a non-monotonic relationship between income and life insurance penetration and between education and life insurance penetration, while life expectancy shows a monotonic relationship with life insurance penetration. This study provides significant policy implications for insurers to predict life insurance demand and suggests that non-high-income countries emphasize the improvement of their life insurance sector development.

Suggested Citation

  • Kristio Rapi & Dominicus S. Priyarsono & Siti Jahroh & Toni Bakhtiar, 2024. "The Non-Monotonic Relationship Between Income and Life Insurance Demand: A Case Study of Forty-One Countries," Economies, MDPI, vol. 13(1), pages 1-22, December.
    • Handle: RePEc:gam:jecomi:v:13:y:2024:i:1:p:4-:d:1557579
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    References listed on IDEAS

    as
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    3. Fortune, Peter, 1973. "A Theory of Optimal Life Insurance: Development and Tests," Journal of Finance, American Finance Association, vol. 28(3), pages 587-600, June.
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    Full references (including those not matched with items on IDEAS)

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