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How Does Price Presentation Influence Consumer Choice? The Case of Life Insurance Products

Author

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  • Carin Huber
  • Nadine Gatzert
  • Hato Schmeiser

Abstract

type="main" xml:lang="en"> Life insurance is an important product for many individuals, both to protect dependents against the premature death of an income producer and to provide savings in later retirement years. These kinds of products, however, can be quite complex. Regulatory authorities and consumers currently ask for more cost transparency with respect to product components (e.g., risk premium for death benefits, savings premium, cost of investment guarantee) and administration costs. The aim of this article is to measure the effects of different forms of presenting the price of life insurance contract components and especially of embedded investment guarantees on consumer evaluation of those products. The intention is to understand the extent to which price presentation affects consumer demand. This is done by means of an experimental study and by focusing on unit-linked life insurance products. Our findings reveal that contrary to other consumer products, there are no precise effects of “price bundling” and “price optic” on consumer evaluation and purchase intention in the case of life insurance. Consumer experience and price perception, however, yield a significant moderating effect.

Suggested Citation

  • Carin Huber & Nadine Gatzert & Hato Schmeiser, 2015. "How Does Price Presentation Influence Consumer Choice? The Case of Life Insurance Products," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 82(2), pages 401-432, June.
    • Handle: RePEc:bla:jrinsu:v:82:y:2015:i:2:p:401-432
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    Cited by:

    1. Bauer Jan, 2020. "Hedging of Variable Annuities under Basis Risk," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 14(2), pages 1-34, July.
    2. Marc A. Ragin & Benjamin L. Collier & Johannes G. Jaspersen, 2021. "The effect of information disclosure on demand for high‐load insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(1), pages 161-193, March.
    3. Halan, Monika & Sane, Renuka, 2017. "Regulating consumer finance: Do disclosures matter? The case of life insurance," Working Papers 17/212, National Institute of Public Finance and Policy.
    4. Anastasia Burkovskaya & Adam Teperski & Kadir Atalay, 2022. "Framing and insurance choices," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(2), pages 311-337, June.
    5. Thomas Url, 2015. "Surge in Single Premium Payments Secured Stable Revenues for Private Insurance Business in 2014," WIFO Bulletin, WIFO, vol. 20(25), pages 282-291, December.
    6. Isaac Akomea-Frimpong & Caleb Boadi & Roger Owusu-Boafo, 2021. "Determinants and challenges of supplying microlife insurance in Ghana," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 331-357, July.
    7. Thomas Url, 2015. "Einmalerläge sichern der Privatversicherungswirtschaft 2014 stabiles Prämienaufkommen," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(9), pages 695-705, September.
    8. Dominique-Ferreira, Sérgio, 2017. "How important is the strategic order of product attribute presentation in the non-life insurance market?," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 138-144.
    9. Luo, Zheng & Chen, Xu & Kai, Ming, 2018. "The effect of customer value and power structure on retail supply chain product choice and pricing decisions," Omega, Elsevier, vol. 77(C), pages 115-126.
    10. Srbinoski Bojan & Strozzi Fernanda & Poposki Klime & Born Patricia H., 2020. "Trends in Life Insurance Demand and Lapse Literature," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 14(2), pages 1-46, July.

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