AN ECONOMETRIC-ANALYSIS OF THE DEMAND FOR LIFE-INSURANCE POLICY LOANS

This article assesses the impact that redesigned life insurance policy loan provisions and changes in financial markets have had on the demand for policy loans. The study investigates policy loan demand for the years 1970 through 1989, which encompasses periods of fixed and variable loan rates. The results suggest that policy loan demand has changed since the introduction of variable loan rates and the redesign of policies. Specifically, the findings show that demand for policy loans driven bv arbitrage potetntial has been reduced.