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Overcoming Barriers to Life Insurance Coverage: A Behavioral Approach
Author(s) -
Coe Norma B.,
Belbase Anek,
Wu April Yanyuan
Publication year - 2016
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/rmir.12064
Subject(s) - actuarial science , life insurance , business , default , mental accounting , psychological intervention , need to know , illusion , marketing , finance , psychology , computer science , computer security , psychiatry , neuroscience
While life insurance purchase decisions have long been studied, we still do not know how people decide if they need insurance or how much they need. Using in‐depth interviews, we peer into the black box of employee decision making to learn what people know about this employee benefit, and how they decide if it is of value for them. We find that individuals understand the need for life insurance, but find many behavioral economic barriers to getting adequate coverage, including mental accounting, money illusion, and a strong role of defaults. We then conduct an online experiment of the hypothetical employee‐benefit purchase scenario, and find a few, simple interventions could help individuals better decide their life insurance needs.