Of course, there are macroeconomic factors that also impact consumption levels, such as interest rates, population growth rates and declines in state or federal pensions relative to income. Consumption economics theories are merely that, theories. Experts contend that predicting consumption level changes is difficult and speculative. For example, if interest rates rise, some argue that it would increase the rate of return for savers who might increase savings and reduce their consumption. However, if they are able to save more they may be inclined to consume more instead, since their original target for savings is not affected either way. With higher interest rates and rates of return they do not have to save as much and can still meet savings goals, "Therefore, savings would fall, and consumption would rise. This would increase the APC. In reality, it is difficult to identify which of these happens; data collects does not suggest conclusively that either theory is correct" (Consumption 2).
There are two main types of life insurance, term and permanent. Term insurance is much less costly than permanent insurance and is the most common and well-understood to consumers. Term insurance charges a monthly agreed upon price (the premium) during an established period of time (the term). When an individual dies, he or she knows the exact amount that will be paid to heirs. There is more than one type of permanent insurance, the kind that pays cash value, but it is also the most complex form of insurance and the one least understood by consumers. However, the responsibility for this does not fall only on the shoulders of consumers, but also on those providing insurance:
Permanent insurance—which encompasses policies that build up savings, including whole, universal and variable insurance—is more complicated. Here your insurer invests part of your premiums and credits you with dividends; your policy accumulates a cash value tha...
Life Insurance: Investment in the Modern Era. (2000, January 01). In LotsofEssays.com. Retrieved 07:31, April 26, 2015, from http://www.collegetermpapers.com/viewpaper/1303941493.html