Wealth and the demand for life insurance: evidence from Ontario, 1892

Our analysis of the life insurance holdings of male probated decedents in Ontario in 1892 demonstrates a negative correlation between the level of personal wealth and the demand for life insurance. Consistent with the theoretical literature on the demand for life insurance, and counter to the findings in much of the empirical literature, self-insurance was a substitute for market purchases of life insurance where self-insurance capabilities are a by-product of wealth accumulation. Our evidence suggests that households primarily demanded life insurance when they lacked accumulated reserves, or wealth, for self-insurance, often early in the life cycle. The growth of the life insurance industry reflected the growth of urban population relative to farming and an increased dependence on the head of household's earnings. (C) 2002 Elsevier Science (USA). All rights reserved.