The impact of giving and receiving remittances on life insurance purchases

Abstract

Remittance arrangements, or inter-household transfers in cash or kind, have been identified as an influential factor in funeral insurance purchase decisions of South African households. On the one hand, remittances can alter income and higher levels of income are associated with more insurance purchases. On the other hand, remittances can act as an informal insurance arrangement reducing formal insurance purchases. It was found using data from the fifth wave of the National Income Dynamics Study that remittances did not have a strong effect on life insurance purchases generally although for young, low-income, unbanked African and other households, receiving remittances may have discouraged life insurance purchases.