The Determinants of Demand for Life Insurance in an Emerging Economy—India

Social security is virtually non-existent in India. While governments play a role providing some security to poor households (through the public distribution system targeted at households below the poverty line), in general financial security remains the responsibility of individuals. Life insurance is one of the most important social security measures undertaken in the country. Based on primary data generated through the National Council of Applied Economic Research’s (NCAER) National Survey of Household Income and Expenditure (NSHIE), this article attempts to identify determinants of life insurance ownership in the country. An analysis using logistic regression has corroborated that insured households tend to be more prosperous, more educated and more optimistic about future security than non-insured households. Both the level of education and occupation of the chief earner of a household are major determinants of life insurance participation, apart from asset-ownership. Further, households that are more optimistic about the adequacy of future income and savings show higher levels of participation. No rural–urban divide has been noticed with respect to these influencing factors.