How Does Price Presentation Influence Consumer Choice? The Case of Life Insurance Products
Journal
Journal of Risk and Insurance
ISSN
0022-4367
ISSN-Digital
1539-6975
Type
journal article
Date Issued
2015
Author(s)
Abstract
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.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SoM - Responsible Corporate Competitiveness (RoCC)
Refereed
Yes
Publisher
American Risk and Insurance Association, Inc.
Publisher place
Malvern, PA
Volume
82
Number
2
Start page
401
End page
432
Pages
32
Subject(s)
Division(s)
Eprints ID
226792