Life Insurance and Retirement Income Rating

Variables	Mean (Std. Error)
Outcome Variable: Retirement Income Rating
Totally Inadequate	0.1925 (0.0038)
Somewhat Inadequate	0.1233 (0.0032)
Enough to Maintain Living Standard	0.3448 (0.0046)
Satisfactory	0.1678 (0.0036)
Very Satisfactory	0.1715 (0.0036)
Explanatory Variables:
Term Life Insurance	0.4765 (0.0048)
Cash Value Life Insurance	0.1906 (0.0037)
Face Value Amount for Term Life	174539.7000 (3861.3520)
Face Value Amount for Cash Value Life	44397.4400 (1848.2120)
Risk-Taking Attitude (Reference: No risk)
No risk	0.3917 (0.0047)
Average risk	0.3883 (0.0047)
Above average risk	0.1803 (0.0037)
Substantial risk	0.0397 (0.0018)
Retired	0.2296 (0.0042)
Education (Reference: High school or less)
High School or less	0.1078 (0.0029)
Some college no degree	0.2469 (0.0042)
Associate degree	0.2764 (0.0044)
Variables	Mean (Std. Error)
College or more	0.3689 (0.0046)
Age	51.9563 (0.1792)
Female	0.2744 (0.0043)
Married	0.5675 (0.0048)
Kids	0.7320 (0.0104)
Race/Ethnicity (Reference: White)
White	0.6864 (0.0043)
Black	0.1482 (0.0032)
Hispanic	0.1111 (0.0029)
Asian	0.0152 (0.0012)
Other race/Ethnicity	0.0390 (0.0018)
Income	130336.5000 (1991.2970)
Net worth	927890.8000 (16805.2800)
Financial Literacy	2.1915 (0.0081)
Self-assessed Personal Finance Knowledge	7.2099 (0.0211)
Year (Reference: 2016)
2016	0.3264 (0.0042)
2019	0.3333 (0.0044)
2022	0.3402 (0.0050)

[i] Data are from the 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

Table 2.

Association Between Term Life Insurance, Cash Value Life Insurance Ownership, and Retirement Income Rating: Ordered-Probit Model

1 (Totally Inadequate)	2	3	4	5 (Very Satisfied)
Term Life Insurance	−0.0083^* (0.0037)	−0.0027^* (0.0012)	−0.0020^* (0.0009)	0.0023^* (0.0010)	0.0107^* (0.0048)
Cash Value Life Insurance	−0.0276^*** (0.0044)	−0.0090^*** (0.0014)	0.0067^*** (0.0011)	0.0077^*** (0.0012)	0.0356^*** (0.0056)
Risk-Taking Attitude (Reference: No risk)
Average risk	−0.0642^*** (0.0049)	−0.0207^*** (0.0017)	−0.0116^*** (0.0010)	0.0210^*** (0.0018)	0.0755^*** (0.0056)
Above average risk	−0.0798^*** (0.0055)	−0.0270^*** (0.0021)	−0.0181^*** (0.0017)	0.0254^*** (0.0019)	0.0995^*** (0.0071)
Substantial risk	−0.0939^*** (0.0076)	−0.0332^*** (0.0033)	−0.0258^*** (0.0039)	0.0288^*** (0.0022)	0.1240^*** (0.0124)
Retired	−0.0733^*** (0.0054)	−0.0239^*** (0.0018)	−0.0179^*** (0.0015)	0.0205^*** (0.0016)	0.0946^*** (0.0070)
Education (Reference: High school or less)
Some college no degree	−0.0229^** (0.0081)	−0.0067^** (0.0023)	−0.0023^** (0.0007)	0.0078^** (0.0028)	0.0240^** (0.0082)
Associate degree	−0.0242^** (0.0083)	−0.0071^** (0.0024)	−0.0025^** (0.0007)	0.0083^** (0.0029)	0.0255^** (0.0084)
College or more	−0.0768^*** (0.0081)	−0.0264^*** (0.0026)	−0.0187^*** (0.0015)	0.0245^*** (0.0029)	0.0975^*** (0.0088)
Age	−0.0005^** (0.0002)	−0.0002^** (0.0000)	−0.0001^** (0.0000)	0.0001^** (0.0000)	0.0006^** (0.0002)
Female	0.0174^** (0.0056)	0.0057^** (0.0018)	0.0042^** (0.0014)	−0.0049^** (0.0016)	−0.0224^** (0.0072)
Married	−0.0014 (0.0052)	−0.0004 (0.0017)	−0.0003 (0.0013)	0.0004 (0.0014)	0.0018 (0.0067)
Kids	0.0101^*** (0.0017)	0.0033^*** (0.0006)	0.0025^*** (0.0004)	−0.0028^*** (0.0005)	−0.013^*** (0.0022)

1 (Totally Inadequate)	2	3	4	5 (Very Satisfied)
Race/Ethnicity (Reference: White)
Black	−0.0198^*** (0.0051)	−0.0068^*** (0.0018)	−0.0059^*** (0.0017)	0.0053^*** (0.0013)	0.0272^*** (0.0072)
Hispanic	0.0169^** (0.0064)	0.0052^** (0.0019)	0.0034^** (0.0011)	−0.0049^* (0.0019)	−0.0207^** (0.0076)
Asian	0.0310^* (0.0135)	0.0092^* (0.0037)	0.0052^* (0.0015)	−0.0091^* (0.0041)	−0.0363^* (0.0145)
Other race/Ethnicity	0.0100 (0.0090)	0.0032 (0.0028)	0.0022 (0.0018)	−0.0028 (0.0026)	−0.0125 (0.0109)
Income	−0.0300^*** (0.0012)	−0.0098^*** (0.0004)	−0.0073^*** (0.0004)	0.0084^*** (0.0004)	0.0387^*** (0.0014)
Net worth	−0.0054^*** (0.0003)	−0.0018^*** (0.0001)	−0.0013^*** (0.0001)	0.0015^*** (0.0001)	0.0070^*** (0.0004)
Financial Literacy	−0.0300^*** (0.0012)	−0.0098^*** (0.0004)	−0.0073^*** (0.0004)	0.0084^*** (0.0004)	0.0387^*** (0.0014)
Self-assessed Personal Finance Knowledge	−0.0054^*** (0.0003)	−0.0018^*** (0.0001)	−0.0013^*** (0.0001)	0.0015^*** (0.0001)	0.0070^*** (0.0004)
Year (Reference: 2016)
2019	−0.0174^*** (0.0040)	−0.0057^*** (0.0013)	−0.0042^*** (0.0010)	0.0049^*** (0.0011)	0.0224^*** (0.0052)
2022	−0.0108 (0.0045)	−0.0034 (0.0015)	−0.0024 (0.0010)	0.0031 (0.0013)	0.0136 (0.0057)

Data are from the 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

* indicates significance at the 5% level.

** indicates significance at the 1% level.

*** indicates significance at the 0.1% level.

Table 3.

Comparing Marginal Effects Between Cash Value Life Insurance and Term Life Insurance

1 (Totally Inadequate)	2	3	4	5 (Very Satisfied)
Difference in marginal effects (cash value life - term life)	−0.0199^*** (0.0055)	−0.0065^*** (0.0018)	−0.0048^*** (0.0013)	0.0056^*** (0.0015)	0.0256^*** (0.0071)

Data are from the 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

* indicates significance at the 5% level.

** indicates significance at the 1% level.

*** indicates significance at the 0.1% level.

Table 4.

Association Between Face Value Amounts of Term Life Insurance, and Cash Value Life Insurance and Retirement Income Rating: Ordered-Probit Model

1 (Totally Inadequate)	2	3	4	5 (Very Satisfied)
Face Value for Term Life Insurance	−0.0010^** (0.0003)	−0.0003^** (0.0001)	−0.0002^** (0.0001)	0.0003^** (0.0001)	0.0013^** (0.0004)
Face Value for Cash Value Life Insurance	−0.0027^*** −0.0003	−0.0009^*** −0.0001	−0.0007^*** −0.0001	0.0008^*** −0.0001	0.0035^*** −0.0004
Risk-Taking Attitude (Reference: No risk)
Average risk	−0.0635^*** (0.0049)	−0.0204^*** (0.0017)	−0.0114^*** (0.0010)	0.0207^*** (0.0018)	0.0745^*** (0.0056)
Above average risk	−0.0789^*** (0.0055)	−0.0266^*** (0.0021)	−0.0177^*** (0.0017)	0.0251^*** (0.0019)	0.0982^*** (0.0071)
Substantial risk	−0.0930^*** (0.0076)	−0.0329^*** (0.0033)	−0.0253^*** (0.0039)	0.0286^*** (0.0022)	0.1227^*** (0.0124)
Retired	−0.0751^*** (0.0055)	−0.0244^*** (0.0018)	−0.0181^*** (0.0015)	0.0210^*** (0.0016)	0.0966^*** (0.0070)
Education (Reference: High school or less)
Some college no degree	−0.0224^** (0.0081)	−0.0065^** (0.0023)	−0.0022^** (0.0007)	0.0076^** (0.0028)	0.0235^** (0.0082)
Associate degree	−0.0234^** (0.0082)	−0.0069^** (0.0023)	−0.0024^** (0.0007)	0.0080^** (0.0028)	0.0247^** (0.0084)
College or more	−0.0753^*** (0.0080)	−0.0259^*** (0.0026)	−0.0182^*** (0.0015)	0.0240^*** (0.0029)	0.0954^*** (0.0088)
Age	−0.0004^** (0.0002)	−0.0001^** (0.0000)	−0.0001^** (0.0000)	0.0001^** (0.0000)	0.0006^** (0.0002)
Female	0.0175^** (0.0056)	0.0057^** (0.0018)	0.0042^** (0.0014)	−0.0049^** (0.0016)	−0.0225^** (0.0072)
Married	−0.0001 (0.0052)	−0.0000 (0.0017)	−0.0000 (0.0012)	0.0000 (0.0014)	0.0001 (0.0067)
Kids	0.0104^*** (0.0017)	0.0034^*** (0.0006)	0.0025^*** (0.0004)	−0.0029^*** (0.0005)	−0.0134^*** (0.0022)

1 (Totally Inadequate)	2	3	4	5 (Very Satisfied)
Race/Ethnicity (Reference: White)
Black	−0.0195^*** (0.0051)	−0.0067^*** (0.0018)	−0.0057^** (0.0017)	0.0052^*** (0.0013)	0.0267^*** (0.0072)
Hispanic	0.0161^* (0.0064)	0.0050^* (0.0019)	0.0032^** (0.0011)	−0.0046^* (0.0019)	−0.0197^** (0.0076)
Asian	0.0303^* (0.0135)	0.0090^* (0.0037)	0.0051^*** (0.0015)	−0.0089^* (0.0041)	−0.0355^* (0.0145)
Other race/Ethnicity	0.0096 (0.0090)	0.0030 (0.0028)	0.0021 (0.0017)	−0.0027 (0.0026)	−0.0120 (0.0109)
Income	−0.0294^*** (0.0012)	−0.0096^*** (0.0004)	−0.0071^*** (0.0004)	0.0082^*** (0.0004)	0.0379^*** (0.0014)
Net worth	−0.0053^*** (0.0003)	−0.0017^*** (0.0001)	−0.0013^*** (0.0001)	0.0015^*** (0.0001)	0.0069^*** (0.0004)
Financial Literacy	−0.0009 (0.0023)	−0.0003 (0.0008)	−0.0002 (0.0006)	0.0002 (0.0007)	0.0011 (0.0030)
Self-assessed Personal Finance Knowledge	−0.0134^*** (0.0009)	−0.0043^*** (0.0003)	−0.0032^*** (0.0002)	0.0037^*** (0.0003)	0.0172^*** (0.0011)
Year (Reference: 2016)
2019	−0.0175^*** (0.0040)	−0.0057^*** (0.0013)	−0.0042^*** (0.0010)	0.0049^*** (0.0011)	0.0224^*** (0.0052)
2022	−0.0110^* (0.0045)	−0.0035^* (0.0015)	−0.0024^* (0.0010)	0.0031^* (0.0013)	0.0138^* (0.0057)

Data are from 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

* indicates significance at the 5% level.

** indicates significance at the 1% level.

*** indicates significance at the 0.1% level.

Table 5.

Comparing Marginal Effects Between Face Value of Cash Value Life Insurance and Face Value of Term Life Insurance

1 (Totally Inadequate)	2	3	4	5 (Very Satisfied)
Difference in Marginal Effects (face value, cash value, life – face value term life)	−0.0017^*** (0.0004)	−0.0005^*** (0.0001)	−0.0004^*** (0.0001)	0.0005^*** (0.0001)	0.0022^*** (0.0006)

Data are from 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

* indicates significance at the 5% level.

** indicates significance at the 1% level.

*** indicates significance at the 0.1% level.

Table 6.

Instrumental Variable Analysis for the Association Between Term Life Insurance, and Cash Value Life Insurance Ownership and Retirement Income Rating

Independent Variables	IV (Term life instrumented)	IV (Cash value life instrumented)
Term Life Insurance	5.5014^*** (IV) (0.5655)	0.3432^*** (0.0216)
Cash Value Life Insurance	0.7413^*** (0.0663)	3.4783^***(IV) (0.2189)
Risk-Taking Attitude (Reference: No risk)
Average risk	0.0106 (0.0434)	0.2067^*** (0.0186)
Above average risk	0.1916^*** (0.0392)	0.2955^*** (0.0211)
Substantial risk	0.7458^*** (0.0556)	0.3730^*** (0.0308)
Retired	1.1620^*** (0.0854)	0.4857^*** (0.0199)
Education (Reference: High school or less)
Some college no degree	−0.3665^*** (0.0639)	−0.0537^* (0.0272)
Associate degree	−0.5719^*** (0.0829)	−0.0636^* (0.0280)
College or more	−0.3855^*** (0.0931)	0.1990^*** (0.0292)
Age	0.0069^*** (0.0010)	−0.0112^*** (0.0010)
Female	−0.3071^*** (0.0388)	−0.1700^*** (0.0207)
Married	−0.8174^*** (0.0914)	−0.2379^*** (0.0247)
Kids	−0.1852^*** (0.0171)	−0.0624^*** (0.0062)
Race/Ethnicity (Reference: White)
Black	−0.2755^*** (0.0508)	−0.1813^*** (0.0273)
Hispanic	0.5053^*** (0.0717)	0.1686^*** (0.0279)
Asian	0.0247 (0.0717)	0.0330 (0.0452)
Independent Variables	IV (Term life instrumented)	IV (Cash value life instrumented)
Other race/Ethnicity	0.4188^*** (0.0693)	0.0533 (0.0317)
Income	0.0567^*** (0.0105)	0.0809^*** (0.0054)
Net worth	0.0066^* (0.0029)	0.0124^*** (0.0015)
Financial Literacy	−0.0974^*** (0.0174)	−0.0249^*** (0.0087)
Self-assessed Personal Finance Knowledge	0.0253^*** (0.0067)	0.0456^*** (0.0034)
Year (Reference: 2016)
2019	0.2003^*** (0.0258)	0.1358^*** (0.0148)
2022	0.4135^*** (0.0452)	0.2078^*** (0.0188)

Data are from 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

* indicates significance at the 5% level.

** indicates significance at the 1% level.

*** indicates significance at the 0.1% level.

Table 7.

Instrumental Variable Analysis for the Association Between Face Value Amounts of Term Life Insurance, and Cash Value Life Insurance and Retirement Income Rating

Independent Variables	IV (Face Value Term life instrumented)	IV (Face Value Cash value life instrumented)
Face Value for Term Life	0.3482^***(IV) (0.0305)	0.0250^*** (0.0014)
Face Value for Cash Value Life	0.0503^*** (0.0037)	0.2341^***(IV) (0.0135)
Risk-Taking Attitude (Reference: No risk)
Average risk	0.0382 (0.0348)	0.2178^*** (0.0166)
Above average risk	0.1299^*** (0.0367)	0.2831^*** (0.0195)
Substantial risk	0.5657^*** (0.0411)	0.3328^*** (0.0287)
Retired	1.1487^*** (0.0713)	0.5381^*** (0.0192)
Education (Reference: High school or less)
Some college no degree	−0.2555^*** (0.0468)	−0.0069 (0.0238)
Associate degree	−0.4270^*** (0.0595)	−0.0176 (0.0245)
College or more	−0.3320^*** (0.0747)	0.2096^*** (0.0263)
Age	0.0069^*** (0.0008)	−0.0088^*** (0.0008)
Female	−0.2225^*** (0.0291)	−0.1525^*** (0.0187)
Married	−0.6959^*** (0.0676)	−0.2148^*** (0.0216)
Kids	−0.2095^*** (0.0163)	−0.0638^*** (0.0056)
Race/Ethnicity (Reference: White)
Black	−0.1205^*** (0.0333)	−0.1086^*** (0.0223)
Hispanic	0.3976^*** (0.0527)	0.1167^*** (0.0238)
Asian	0.0308 (0.0604)	0.0247 (0.0412)
Other race/Ethnicity	0.3314^*** (0.0535)	0.0243 (0.0287)
Income	0.0253^* (0.0111)	0.0595^*** (0.0058)
Net worth	0.0052^* (0.0026)	0.0133^*** (0.0014)
Financial Literacy	−0.1134^*** (0.0157)	−0.0253^** (0.0079)
Self-assessed Personal Finance Knowledge	0.0279^*** (0.0055)	0.0474^*** (0.0031)
Year (Reference: 2016)
2019	0.1715^*** (0.0207)	0.1175^*** (0.0133)
2022	0.3076^*** (0.0311)	0.1580^*** (0.0158)

Data are from 2016, 2019 and 2022 Survey of Consumer Finances. Number observations = 16,620. Standard errors are in parentheses.

* indicates significance at the 5% level.

** indicates significance at the 1% level.

*** indicates significance at the 0.1% level.

Test	IV (Term life instrumented)	IV (Cash value life instrumented)	IV (Face Value Term life instrumented)	IV (Face Value Cash value life instrumented)
First-stage-F-statistics	75.15	542.57	114.12	498.84
Durbin (Score) χ²	542.57 (p = 0.0000)	542.57 (p = 0.0000)	521.504 (p = 0.0000)	521.504 (p = 0.0000)
Wu-Hausman F	545.97 (p = 0.0000)	545.97 (p = 0.0000)	524.639 (p = 0.0000)	524.639 (p = 0.0000)

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Articles in this issue

DOI: https://doi.org/10.2478/fprj-2025-0008 | Journal eISSN: 2206-1355 | Journal ISSN: 2206-1347

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Language: English

Published on: Sep 2, 2025

Published by: Financial Advice Association of Australia

In partnership with: Paradigm Publishing Services

Publication frequency: 2 issues per year

Keywords:

Cash value life insurance,

Term life insurance,

Retirement planning

Related subjects:

Business and economics,

Political economics,

Economic theory, systems and structures,

Business management,

Business management, other,

Industries,

Banks, financial service provider, insurers

© 2025 Sabina Pandey, Michael A. Guillemette, Ichchha Pandey, published by Financial Advice Association of Australia
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 11 (2025): Issue 2 (September 2025)