Theoretical Model And Empirical Research On Life Insurance Demand

Demand for life insurance is important issue for insurance business practice and theoretical research. It is a notable feature for modern life insurance industry that investment-oriented life insurance takes the absolute position; therefore, it requires timely improvements for life insurance demand theory whose study object is protection-oriented life insurance. This paper makes research on the life insurance demand, especially focuses on investment-oriented life insurance in order to understand demand law of investment-oriented life insurance. Investment-oriented life insurance is life insurance product which combines insurance and investment functions and gives uncertain return to investors,including participating insurance, universal insurance and unit-linked insurance.Its return is uncertain for investment-oriented life insurance which has security and financing functions and it is difficult to collect its data. Thus,there are a few theoretical and empirical literatures which should be improved.In the past ten years,investment-oriented life insurance products have profoundly changed the pattern of life insurance industry. At present, the life insurance industry is facing a slowdown and regression protection products and many other issues.Therefore,it is of vital theoretical and realistic significance for study on demand for life insurance especially demand for the investment-oriented life insurance.First, this paper defines the concept of demand for life insuranc and related concepts,then sort out the history of the development of investment-oriented life insurance,introduces the specific varieties and analyzes its characteristics.Based on overview of theory, this paper qualitatively analyzes the factors influencing the demand.For the theoretical model,according to the principle from simple to complex and portfolio perspective,we first set up continuous time model of protection-oriented life insurance.On this basis,we further assume that individuals purchases investment-oriented life insurance products which has the double functions of security and investment. We expand the base model to establish continuous-time model of investment-oriented life insurance for demand.This paper does an empirical research on demand for China's life insurance based on theoretical analysis.Firstly, we construct a State Space Model of variable parameter with quarterly data from1999to2010to analyze the relationship among income,interest rate,inflation and life insurance demand.The objection of study is to understand changes of life insurance demand with the proportion rise of investment-oriented life insurance products.Then, Employing the investment-oriented life insurance premium data of35large and medium cities in China from2001?2010,it is applied to establish dynamic panel data model to test how factors influencing demand.Based on these contents and consideration of research,the core innovation of the paper can be generalizes as follows:(1)we establie new theoretical model of demand for investment-oriented life insurance by constructing new double random process,solving simple and the result is simple,its economic significance is very clear;(2)we obtain "M-S theorem" in life insuance and found the formula of premium--net wealth to explain "the annuity puzzle" and firstly point out how consumption has effect on demand for life insurance by exploring economic significance of the solution; we derive "the separation theorem" between security-oriented life insurance and risk assets;(3) in this paper, the dynamic analysis results of demand for life insurance, its economic significance is more obvious, more close and the reality;(4)we firstly apply the state space model to empirically analyze the demand for life insurance in China so that we newly understood demand change with different economic environment;(5)we firstly apply dynamic panel data model to empirically analyze the demand for investment-oriented life insurance and examine the factors how affecting the investment-oriented life insurance.Based on these studies, this paper draw conclusions as follows:(1)if premium is actuarially fair, security-oriented life insurance is perfect substitutes for net wealth, premium rate is to security-oriented life insurance marginal propensity to consume;(2) it has positive effect on demand for investment-oriented life insurance products for future income, risk aversion parameter,volatility of risk capital and yield of investment life insurance; its influence is negative for the default rate of investment-oriented life insurance, return of risk capital and discount factor; its influence is uncertain for individual current wealth and premium ratio; the consumption has important effect on demand of investment-oriented life insurance;(3)the empirical research based on the state space model show that influence is not always be same in different period for income, that the impact of interest rate on life insurance demand is related to the capital market development, that inflation has influence on life insurance demand, which will be correlative with the proportion of different life insurance;(4) the empirical study based on dynamic panel data model shows that the rapid growth of investment-oriented life insurance is mainly applied for a substantial increase in people's income, which is preserved to fight and hedge against inflation; The study finds that consumers pay more attention to investment function of investment-oriented life insurance in short term, and consider its security function, but effect of security function is not significant due to its investment function.