The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Wealth and Insurance Choices: Evidence from U.S. Households
Published: 01/30/2025 | DOI: 10.1111/jofi.13426
MICHAEL J. GROPPER, CAMELIA M. KUHNEN
Using administrative data for 63,000 individuals across 2,500,000 person‐month observations, we find that wealthier individuals have better life insurance coverage, controlling for the value of the asset insured, namely, the consumption needs of dependents. This positive wealth‐insurance correlation, which is surprising given the prevailing view that wealth substitutes for insurance, persists after allowing for wealth‐related differences in risk or bequest preferences, pricing, background risk, education, employment, or liquidity constraints. Our findings call for further investigation of this wealth‐coverage correlation but support theories emphasizing the consumption‐smoothing role of insurance across not only states of the world, but also time.