Which one(s) of the following variables has a positive relationship with insurance demand? 1, Human Capital Volatility 2, Age 3, Risk Tolerance 4, Financial Wealth 5, Bequest Motivation 6, Probability of death You can use +/-. Please add more factors if I miss any.
1, Human Capital Volatility -ve 2, Age -ve 3, Risk Tolerance +ve 4, Financial Wealth -ve 5, Bequest Motivation +ve 6, Probability of death +ve
agree with all of acers but 3 the higher ur risk tolerance the lower ur demand for insurance no?
1-4 - 5-6 +
^ Agree with the good man above.
pimpineasy Wrote: ------------------------------------------------------- > agree with all of acers but 3 > > the higher ur risk tolerance the lower ur demand > for insurance no? yep, u r right…nt sure wat was my thought process …
Can someone explain relationship between “age” and “Demand for life insurance”?
Finally, the investor’s demand for insurance decreases as she ages. This result is not surprising because the primary driver of insurance demand is human capital, so the decrease in human capital reduces insurance demand. (Level III Volume 2 Behavioral Finance, Individual Investors, and Institutional Investors , 4th Edition. Pearson Learning Solutions 337).
Thank you.
what about human capital volatility…? the higer human capital volatility, the less insurance demand? dont understand this relationship!
higher the human cap vol is the higher the discount factor leading to a lower PV of human capital and hence lower insurance demand,…this has been debated extensively here ( use the search function) however at this point just memorize
Huh… that makes really good sense. Couldn’t get me head around it before. Thx!
Just remember that lower human capital, lower demand for life insurance.
Where can I find the ‘age’ and ‘insurance’ relationship? Just searched notes, but could not find it. it is not reflected in the formula too. Thanks!!!
hellscream Wrote: ------------------------------------------------------- > Where can I find the ‘age’ and ‘insurance’ > relationship? > > Just searched notes, but could not find it. > > it is not reflected in the formula too. > > > > Thanks!!! Age is simple…Younger means high human capital relative to financial capital, lower demand for life insurance, all else equal, and vice versa.
abushey31 Wrote: ------------------------------------------------------- > hellscream Wrote: > -------------------------------------------------- > ----- > > Where can I find the ‘age’ and ‘insurance’ > > relationship? > > > > Just searched notes, but could not find it. > > > > it is not reflected in the formula too. > > > > > > > > > Thanks!!! > > > Age is simple…Younger means high human capital > relative to financial capital, lower demand for > life insurance, all else equal, and vice versa. Younger->Higher HC->Higher PV for HC-> Higher demand for insurance?
hellscream Wrote: ------------------------------------------------------- > abushey31 Wrote: > -------------------------------------------------- > ----- > > hellscream Wrote: > > > -------------------------------------------------- > > > ----- > > > Where can I find the ‘age’ and ‘insurance’ > > > relationship? > > > > > > Just searched notes, but could not find it. > > > > > > it is not reflected in the formula too. > > > > > > > > > > > > > > > Thanks!!! > > > > > > > Age is simple…Younger means high human > capital > > relative to financial capital, lower demand for > > life insurance, all else equal, and vice versa. > > Younger->Higher HC->Higher PV for HC-> Higher > demand for insurance? Sorry…dumb mistake…yes, meant higher demand. Demand decreases as you get older, according to the model.