Funeral Insurance: An Inter-Generational Commitment Device?
Journal of African Economies, 2018, vol. 27, issue 3, 321-346
Funeral insurance is a global phenomenon that has existed throughout history and remains hugely popular in Africa today. Yet as a distinct financial device it has received little attention. The question is why it seems, in many contexts, to be preferred over standard life insurance even though the latter is a more flexible product. This paper presents a simple model in which funeral insurance differs from life insurance in that there is a constraint on how the payout is spent. Funeral insurance can therefore serve as an intergenerational commitment device. The modelâ€™s key prediction is consistent with South African household data.
Keywords: funeral insurance; life insurance; insurance demand; commitment device (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jafrec:v:27:y:2018:i:3:p:321-346.
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