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Implicit Prioritization of Life Insurance Coverage: A Study of Policyholder Preferences in a Danish Pension Company

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  • Julie Bjørner Søe

    (Department of Mathematical Sciences, University of Copenhagen, Universitetsparken 5, DK-2100 Copenhagen, Denmark
    Mancofi A/S, Carl Jacobsens Vej 20, DK-2500 Copenhagen, Denmark)

Abstract

This study evaluates the utility derived by policyholders in a Danish pension company, from their life insurance coverages. We quantify the relative importance policyholders assign to their existing coverages versus a hypothetical complete coverage scenario, thereby measuring the implicit priority of their current coverage. By analyzing these implicit priorities based on individual attributes such as age, financial situation, and company agreement limitations, we gain a comprehensive understanding of policyholders’ evaluations of their current life insurance coverage. Utilizing a continuous-time life cycle model, we optimize consumption and life insurance decisions during the accumulation phase, applying well-established theoretical findings to actual data. Our analysis identifies trends, outliers, and insights that can inform potential improvements in life insurance coverage. This tool aims to assist policyholders in prioritizing their coverage according to their life situations and provides a foundation for advisory dialogues and product development.

Suggested Citation

  • Julie Bjørner Søe, 2025. "Implicit Prioritization of Life Insurance Coverage: A Study of Policyholder Preferences in a Danish Pension Company," Risks, MDPI, vol. 13(6), pages 1-17, May.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:6:p:103-:d:1664859
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    References listed on IDEAS

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    3. Pliska, Stanley R. & Ye, Jinchun, 2007. "Optimal life insurance purchase and consumption/investment under uncertain lifetime," Journal of Banking & Finance, Elsevier, vol. 31(5), pages 1307-1319, May.
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