j_fprj-2025-0008_tab_008
| 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) |
Association Between Term Life Insurance, Cash Value Life Insurance Ownership, and Retirement Income Rating: Ordered-Probit Model
| Independent Variables | Retirement Income Rating | ||||
|---|---|---|---|---|---|
| 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) |
Comparing Marginal Effects Between Cash Value Life Insurance and Term Life Insurance
| Retirement Income Rating | |||||
|---|---|---|---|---|---|
| 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) |
Summary Statistics
| 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) |
Association Between Face Value Amounts of Term Life Insurance, and Cash Value Life Insurance and Retirement Income Rating: Ordered-Probit Model
| Independent Variables | Retirement Income Rating | ||||
|---|---|---|---|---|---|
| 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) |
Comparing Marginal Effects Between Face Value of Cash Value Life Insurance and Face Value of Term Life Insurance
| Retirement Income Rating | |||||
|---|---|---|---|---|---|
| 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) |
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) |
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) |