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Business & Economics

INVESTMENT, PROTECTION, OR WASTE OF MONEY: THE DETERMINANTS OF THE DEMAND FOR LIFE INSURANCE AND PRIVATE PENSIONS IN THE CASE OF ROMANIA
Ingrid-Mihaela Dragota Simona-Laura Dragos, Cristian-Mihai Dragos

ABSTRACT.The life insurance and private pension industries in Romania are underdeveloped in comparison to the global standards. Using a self-designed questionnaire and a related national survey conducted in 2010 for major urban population holding one or both financial products, the authors of this article analyse their financial, social, and demographic determinants. This study contributes to the literature by focusing on four financial characteristics: investment, protection, uncertainty, and waste of money, and the authors of this study prove that these variables are the most significant variables in the proposed binary logit models. The results suggest that annuities are held less than life insurance policies mainly by single persons for the investment purposes and are negatively related to age and positively related to income and the number of dependents. Participation in life insurance increases with age, wealth, and education and is strongly correlated with the variables related to the bequest motive: married men, with children, and declaring "protection" as a prevailing argument for choosing this financial product.

KEYWORDS: life insurance demand, annuities, protection, investment, Romania.

JEL classification: G22, G23, C25, D14.