IDEAS home Printed from https://ideas.repec.org/a/eee/insuma/v128y2026ics0167668726000375.html

Exploring health improvement incentives through wellness-linked products

Author

Listed:
  • Chen, An
  • Schelling, Stefan

Abstract

In this paper, we investigate the potential of wellness-linked life insurance products to encourage policyholders to adopt health-promoting behaviors. We establish two key theoretical contributions: first, we demonstrate a complementary relationship between prevention effort and insurance coverage in wellness-linked products – showing that, in contrast to the classical Ehrlich and Becker (1972) result for traditional insurance, positive effort can be optimal even in the case of full insurance. Second, through a Stackelberg equilibrium framework, where the effort is determined endogenously, we examine the economic pricing and demand for wellness-linked products. Our analysis reveals that wellness-linked products enhance prevention efforts without significantly reducing total insurance coverage, creating value for both parties. Numerical illustrations demonstrate the practical viability of these products, and extensions confirm that our core results carry over to survival-bonus contracts, heterogeneous risk classes, and a health-long-term-care variant.

Suggested Citation

  • Chen, An & Schelling, Stefan, 2026. "Exploring health improvement incentives through wellness-linked products," Insurance: Mathematics and Economics, Elsevier, vol. 128(C).
    • Handle: RePEc:eee:insuma:v:128:y:2026:i:c:s0167668726000375
    DOI: 10.1016/j.insmatheco.2026.103247
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167668726000375
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.insmatheco.2026.103247?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:insuma:v:128:y:2026:i:c:s0167668726000375. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505554 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.