Expenditures for Life Insurance among Working-Wife Families

Abstract

Working-wife families with fully-employed husbands may constitute both an opportunity and a challenge to the life insurance industry because they spend substantially less on life insurance than do housewife families with similar incomes. This article investigates the extent of and reasons for the underconsumption of life insurance by these relatively affluent families whose number is growing rapidly. The relevance of several economics and sociological hypotheses to this phenomenon is investigated. The quantitative portion of the analysis is accomplished by tabular comparisons and multiple regression. Suggestions for further research and marketing action are offered. Approximately twenty per cent of today's United States labor force consists of married women with spouse present. Indications are that such families will increase in number absolutely and as a proportion of the labor force.' Workingwife families, with husband present and fully employed, may constitute a market segment of special interest to the life insurance industry for two reasons. First, by their very nature, they have above Jacob M. Duker, Ph.D., is Associate Professor, Marketing, in the School of Business Administration of the University of Connecticut. This article was submitted in July, 1968. The author expresses appreciation for suggestions received from Professors Irving Schweiger, Harry V. Roberts and Harry Davis of the University of Chicago and Harry M. Johnson of the University of Connecticut; for financial support from the University of Connecticut Research Foundation; for data received from the Survey Research Center of the University of Michigan (through Ford Foundation assistance) and the University of Pennsylvania (in concert with the U.S. Bureau of Statistics); and for computer time at the University of Connecticut Computer Center through the National Science Foundation. 1 See Sophia Cooper and Denis F. Johnston, Labor Force Projections for 1970-1980, Monthly Review, February, 1965, pp. 129-140; Table 1, p. 130. average incomes, and, second, they spend less on life insurance than do families of similar incomes, in which the wife is a housewife rather than a working-wife. This article presents the evidence of such expenditure differences in tabular analyses and by multiple regression analysis. It also examines the meaning of this evidence by application of some behavioral hypotheses as well as by the multiple regression analysis. Data and Methodology The major portion of the data is derived from the Survey Research Center of the University of Michigan Survey of Consumer Finances for 1959 and subsequent reinterview data. Data from the 1950 BLS-Wharton Survey of Consumer Expenditures are used to reduce the dependence on one-year cross section data.2 2 Study 688, Decks 1, 2, 3, 4, and 6, University of Michigan Survey Research Center, Ann Arbor Michigan for the 1959 data; and Study 707, Deck F and Study 715, Deck 5, same source for the reinterview data. (See footnote 23 infra); and Deck MP-2, covering U.S. Bureau of Statistics, Wharton School of Finance and Commerce Survey of Consumer Expenditures, 1950. Of the 2,972 families in Deck 688, 591 met the criteria and were used in this study.