The Impact Of Commercial Life Insurance On The Allocation Of Family Risk Financial Assets

Family insurance and finance is a current research topic that affects people from all walks of life.China’s economy has risen swiftly since liberalization and deregulation,with families amassing wealth and their investment accounts continuously increasing.Despite the fact that families have an increasing number of financial assets,the majority of these assets are risk-free or low-risk,the fraction of risky financial investments made is typically low,and the architecture of household investment instruments is single.At present,with the broadening of income sources and the continuous growth of residents’ income,coupled with China’s transition to an aging society,the concept of insurance has been deeply rooted in people’s hearts,and people’s demand for future protection is also growing.Residents have already started to "buy" protection for the future,so the huge potential of the commercial life insurance market has emerged.By changing household income distribution,adjusting the level of precautionary savings,and shifting investors’ risk attitudes,participation in commercial life insurance will influence household allocation to hazardous financial assets.Based on this,this paper focuses on this issue.Through three main parts: theoretical analysis,actual situation analysis,and empirical analysis,this research investigates the relationship between commercial life insurance and household hazardous financial asset allocation.In terms of theoretical analysis,this paper examines the relationship between the two,primarily through three perspectives of the impact of commercial life insurance on income distribution,precautionary savings,and risk attitude,and whether such impacts differ under different conditions,before proposing the research hypothesis of this paper.In the analysis of the current situation,this paper finds that the original premium income of commercial life insurance in China has been increasing from 2010 to 2021,and by measuring the depth and density of commercial life insurance,we find that commercial life insurance has a high potential for future development,and that participation in commercial life insurance will drive households to participate in risky financial asset allocation compared to those who are not insured by commercial life insurance.In line with research assessment,the effect of commercial life insurance on households’ allocation of risky capital instruments is examined using two models,Probit and Tobit,respectively,and 2017 CHFS data,it then investigates whether there are variances in the role of commercial life insurance on families’ riskier investment asset allocation under various situations,as well as the pathways through which commercial life insurance impacts households’ riskier investment asset allocation.Finally,endogeneity tests are carried out using the instrumental variables approach,and robustness tests are carried out by replacing explanatory variables with control variables in order to test the hypotheses further.The following conclusions can be taken from the preceding analysis: When compared to not having commercial life insurance,having commercial life insurance increases the likelihood of households allocating risky financial assets and the proportion of investment to risky financial assets by 44.6 percent and18.7 percent,respectively.Through the mediating effect of precautionary savings and risky financial assets,commercial life insurance influences the likelihood of households participating in hazardous financial markets and the share of investment in risky financial assets.Savings has the biggest influence as a mediating effect.Households in various regions have various risky financial investment strategies,resulting in different effects of commercial life insurance on those allocations,with families in the western province having lower demand for advertising life insurance as well as risky financial assets than households in the eastern and central regions.Because of China’s present disparities in economic development between urban and rural areas,the proportion of commercial life insurance to household risk financial asset allocation varies.Holding commercial life insurance has a different impact on household risk financial asset allocation depending on one’s income level.The contribution of commercial life insurance to household risk financial asset allocation has a life-cycle effect.This paper recommends the following based on the above conclusions: improve commercial life insurance goods and services;expand life insurance coverage for families in rural and western areas;financial product innovation should be accelerated,and financial market supervision should be strengthened;improve the financial environment and popularize financial knowledge.