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Uptake of Micro-Life Insurance in Rural Ghana

Lena Giesbert


This paper investigates the conditions under which households decide to participate in the emerging microinsurance market. It estimates the cross-sectional determinants of households’ decision to take up a micro life insurance by using data from a survey conducted among 1030 insured and non-insured households in rural Ghana in 2009. Insurance participation is examined against a simple neoclassical benchmark model, which argues that life insurance take-up increases with risk aversion, the prospect variability of risk, initial wealth, and with the ‘intensity for bequests’. In line with earlier studies on micro health insurance and agricultural insurance, it is found that participation in micro life insurance is explained by a number of factors which are at odds with the predictions of the conventional model. The evidence confirms the outstanding role of trust and social networks for the probability of purchasing micro life insurance. This is underlined by a strongly negative association of the idiosyncratic risk assessment within the household with the uptake of micro life insurance, suggesting that households view the microinsurance policy itself as a risky option.

Publication Type(s)

Conference Paper

Ten Years of War Against Poverty Conference Papers

Conference: Ten Years of War Against Poverty


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