Structural Differences of Life Insurance Demand:Protection and Investment

This study compares and tests the determinants of the demand for two types life insurance:traditional life insurance and investment-oriented life insurance.Using cross-section data of 284 cities in 2008,the authors use seemingly unrelated regression and 3-stage least squares regress to estimate the demand equations of the two types life insurance.The result shows that:social security has a significant substitution effect on traditional life insurance and significantly promotes investment-oriented life insurance demand;the capacity of investment-oriented life insurance is greater than traditional life insurance in transforming the household savings;inflation expectation reduces traditional life insurance demand but increases investment-oriented life insurance demand;finance development benefits investment-oriented life insurance more than traditional life insurance.These conclusions are still robust when considering the influence and the endogeneity of supply-side factors.