Explaining consumers' progress through life insurance decision states: The role of personal values and consumer characteristics

Abstract

Many people have unsuitable life insurance cover or no cover at all. In this study, we survey consumers about their readiness to purchase life insurance. Consumers rate their own “decision state” from “pre‐aware” of life insurance to “aware,” “interested” or “capable” of deciding to purchase. We also collect data on factors associated with progress along the path to purchase. We find that personal values partly determine life insurance decision states. Values matter in addition to the needs of dependents, bequest intentions, and financial literacy. Consumers who place more value on benevolence and self‐direction are more likely to be aware of life insurance. Our results suggest strategies to promote suitable life insurance cover by targeting factors that help progress through each decision state. Insurance providers could thus prime benevolence and self‐direction in advertising and product information.

‘Fledgling Financial Needs’, Affordability and Attitudes as Drivers of Noninsurance Among Young Australians*

“…Based upon this literature, we developed three research hypotheses that formed the basis for our study: (i) that young people aged 18–24 forego insurance at higher rates relative to other age groups even when they have assets warranting protection; (ii) that affordability remains the driving cause of noninsurance for people in this age group; (iii) that attitudes associated with noninsurance—such as distrust of insurers, a lack of perceived social obligation to insure and lesser risk aversion—are especially prevalent in this age group, contributing to their tendency to forego insurance at higher rates alongside asset levels and affordability concerns. We tested these hypotheses by comparing the data from two online surveys delivered through the research company Pureprofile, which maintains a database of panellists who complete surveys for a small cash payment, and which has been used extensively in previous studies to carry out surveys on consumer behaviour and decision‐making regarding retirement planning, debt and life insurance purchase (Agnew et al ., 2013; Bourova et al ., 2019; Bateman et al ., 2023). Survey 1 targeted ‘insured’ Australians who had purchased a building, home contents or comprehensive car insurance policy.…”