Financial inclusion and life insurance demand; Evidence from Italian households

This paper studies the demand drivers for life insurance, both lump sum and annuity, using the Bank of Italy (SHIW) panel dataset 2004-2012. We consider both participation and invested amounts. Our results point at a role of financial inclusion as pivotal in shaping life insurance demand, especially annuities, even if we extend annuities to pension funds participation. We use stock market participation, home ownership and financial literacy as proxies for financial market inclusion. Most traditional drivers of demand, such as income, wealth, geographical or sociological variables, apart from gender, fade away in comparison to financial inclusion, even when we control for time and individual fixed effects and for the potential endogeneity of financial inclusion.