Bequest Motives and Determinants of Micro Life Insurance in Sri Lanka

Abstract

This paper emphasizes bequest motives by evaluating participation patterns in micro life insurance against insurance demand and supply side factors. Based on household survey data from Sri Lanka, it presents evidence on the determinants of micro life insurance participation of low-income households, using probit and tobit models. The results provide evidence that micro life insurance is positively correlated with measures of bequest motives such as the number of children or dependents. Besides, better off households are less excluded from micro life insurance markets than their poorer counterparts. The study finds a convincing need for the microinsurance sector to be more responsive to the needs of the poor, with a key role in providing financial education to understand the need for microinsurance.