Demand Flashcards
Why is life insurance so important in an economy?
It provides stability to the stock market as it purchases long term assets
Explain how supply for life insurance influences more demand
More supply= competition = cheaper policy’s = more people can afford it
Why do people need life insurance? (3)
- Financial dependency has lengthened
- Debit protection
- Demographics: Ageing population that still have financially dependent children
What does supply of life insurance depend on? (5)
- Expertise in the country
- Legal protection
- Fraud and policing of fraud
- Distribute cost in a cost-effective manner
- Demand for insurance products
Why is competition in a market a good thing for potential entrants?
Show that the market works
Why has demand increased (5)
- Cost of dependents
- Level of education
- Financial development of a country
- Competiton = cheaper policies
- Social welfare
Life insurance demand in a Liberal market econnemy
High as the state doesn’t step in
Life insurance demand in a socialist economy?
Low as state provides more
What causes demand to decrease? (4)
- Increased life expectancy
- High inflation - reduces the value of the policy
- Real interest rates
- Better social welfare
How does age influence insurance demand?
The older you are the more concerned you are about death
As you get older do you consume more or less life insurance?
Less
How does education influence demand?
Life insurance is a complicated process, educated people are more risk-averse and have a longer dependency time on parents. They also make better life choices.
How does family size influence insurance demand
You have more dependents
How does income influence insurance demand
More income = more affordable
Higher incomes also mean that your income is more important and should be protected.
Homeownership need insurance protection
How does religion influence insurance demand
- Larger family size
- Some religions don’t believe in making a profit from betting on somebody’s life.
