How effectively do households insure food consumption and assets against funeral expenses? The case of urban Zimbabwe

In response to funeral expenses, which drastically affect household consumption, many families in developing countries enter into formal and/or informal funeral insurance arrangements. Using new household survey data collected in the city of Bulawayo, Zimbabwe, we investigate the effectiveness of these arrangements in insuring food consumption and household non-financial assets against funeral expenses. We find that informal funeral insurance, especially when combined with formal insurance, effectively insures household assets from funeral shocks. Households that own more than one item of the same asset prefer to sell assets rather than destabilise food consumption, in the event that funeral insurance is inadequate or not available. Households without multiple of the same asset prefer to retain their assets and destabilise food consumption. We also show that the funeral insurance of households in Bulawayo partially insures food consumption. Our findings suggest that households have a hierarchy of preferred coping strategies when they are either uninsured or not fully insured against shocks.