Can the life insurance market provide evidence for a bequest motive?

Using U.K. microeconomic data, we analyze the empirical determinantsof participation in the life insurance market. We ?nd 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 findings provide evidence supporting the presence of a bequest motive.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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