Age, Period, and Cohort Effects on Life Insurance Purchases in the U.S.

Previous studies of life insurance demand mainly employ multivariate regression analysis to examine the social, economic and demographic effects on life insurance purchases. However, this causal modeling approach can not separate the age, period, and cohort effects completely. This study employs cohort analysis method as well as age standardization and decomposition to examine the life insurance purchase pattern in the U.S. from 1940 through 1996. It finds that, without the aging process, the purchase rate in 1990 and 1995 would have been even lower. It also finds that the baby boomers tend to purchase lesser life insurance than their earlier counterparts and that this phenomenon consequently led to the decline of recent life insurance purchases in the U.S. Men show a strong age effect and strong negative cohort effects while women have strong positive cohort effects.