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This paper examines the determinants of demand for life insurance in a small open economy within an integrated macroeconomic framework. Within this framework life insurance is looked at via its various financial and social components, as a savings and investment instrument and as an instrument to hedge against risk. The extent of the variations in the dollar value of life insurance premium income in Barbados is analysed with respect to movements in demand factor such as interest rates, prices, wages, tax relief and unemployment levels. An error correction model is utilized in order to desegregate the effects of these determinants into long-run and short-run effects.