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Funeral Insurance: An Inter-Generational Commitment Device?

Research output: Contribution to journalArticle

Original languageEnglish
JournalJournal of African Economies
StateAccepted/In press - 1 Nov 2017

Abstract

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 inter-generational commitment device. The model's key prediction is consistent with South African household data.

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