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Overcoming Barriers to Life Insurance Coverage: A Behavioral Approach

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  • Anek Belbase
  • Norma B. Coe
  • April Yanyuan Wu

Abstract

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 to 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 the 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.

Suggested Citation

  • Anek Belbase & Norma B. Coe & April Yanyuan Wu, 2015. "Overcoming Barriers to Life Insurance Coverage: A Behavioral Approach," Working Papers, Center for Retirement Research at Boston College wp2015-5, Center for Retirement Research.
    • Handle: RePEc:crr:crrwps:wp2015-5
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    References listed on IDEAS

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    Cited by:

    1. Anek Belbase & Geoffrey T. Sanzenbacher, 2017. "Default Contribution Rates and Participation in Automatic IRAs by Uncovered Workers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(3), pages 376-388, July.
    2. Robinson, Peter John & Botzen, W. J. Wouter & Kunreuther, Howard & Chaudhry, Shereen J., 2021. "Default options and insurance demand," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 39-56.

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