Life insurance consumption across generations: The roles of financial knowledge, planning horizon, and self-control

Abstract

Life insurance enhances households' capacity to absorb financial shocks and protects against personal risks that no one likes to contemplate. This is even more important in times of economic hardship such as now, when many Europe countries and particularly Spain are going through difficult times due to rising inflation, the war in Ukraine, and the ongoing COVID-19 pandemic. Although previous studies have analysed the driving forces of life insurance demand, the influence of the individual's financial planning horizon, financial knowledge, and financial self-control have been underexplored. This study analyses the influence of personal financial attributes on life insurance demand and, in so doing, explores whether the effects of such attitudes differ across different generational cohorts (i.e., the silent generation, baby boomers, Gen Xers, and millennials). The data, taken from the Survey of Financial Competences, comprises 7245 Spanish individuals. Evidence from multivariate analyses reflects the relevance of standard sociodemographic characteristics in explaining individuals' decisions to become life insurance holders. In contrast, evidence does not support a statistically significant relationship in the case of behavioural variables such as financial self-control and the financial planning horizon.