THE FLOW OF NET CASH SAVINGS THROUGH LIFE INSURANCE COMPANIES*

Abstract

s of Doctoral Dissertations 83 ing the protective (term and group) rather than the savings element will tend to lessen the flow of payments to policyholders and total expenditures in periods of economic distress. A second set of conclusions drawn from this study has to do with the statistical relation of insurance flows to disposable personal income. Are the component insurance flows rigid in relation to annual changes in disposable personal income? It was found that total income and its component flows (with the exception of first year's premiums), and net income, moved in the same direction as disposable personal income. The coefficients of correlation are very high, more than .9. Insurance saving, therefore, was not perverse. Second, were the annual movements of total income and its components, and net income, as sensitive as those of disposable personal income? Renewal premiums, the investment income flows, and total premiums, because of their contractual nature, were not as sensitive as disposable personal income. But net saving through life insurance (net income) was more sensitive than disposable personal income because of the heavy outflow of payments to policyholders (an expenditure flow) during depressions and recession. Saving through life insurance dropped much more rapidly between 1929 and 1932 than disposable personal income. Saving through life insurance was much less sensitive than personal saving during the Great Depression. Saving through life insurance was positive while personal saving was negative. This content downloaded from 207.46.13.176 on Mon, 20 Jun 2016 06:17:34 UTC All use subject to http://about.jstor.org/terms