Life Insurance and Retirement Income Rating

Abstract This study utilises data from the Survey of Consumer Finances (SCF) to investigate the associations between life insurance ownership, its face value, and individuals' self-reported retirement income ratings. The analysis based on the U.S. data and regulatory frameworks reveals that ownership of both term and cash value life insurance is positively associated with higher retirement income ratings. Moving beyond traditional utility-maximisation frameworks, the study interprets findings through the lens of behavioural economics and notes they are most applicable within the American financial context. These associations suggest, for boundedly rational individuals, life insurance offers a tangible and perceived sense of security.