How Do People Decide on Life Insurance and Long-Term Disability Insurance Coverage?

23 Pages Posted: 2 Jun 2015

See all articles by Norma Coe

Norma Coe

University of Pennsylvania - Perelman School of Medicine

Anek Belbase

Boston College - Center for Retirement Research

Date Written: June 2015

Abstract

The group benefits landscape is changing dramatically. The menu of available options has grown; employers are paying for fewer benefits; and the responsibility for selecting the benefit package has been increasingly left to the employee. However, unlike in the pension world, very little is known about how individuals select their benefits packages, if their selections are optimal for their situations, or what employers can do to encourage the optimal benefit package selection. In this changing benefit landscape, it is important to determine three things: (1) What are current employer practices and their resulting take-up and coverage patterns?; (2) Which practices influence employees’ selections?; and (3) What can employers do to make the employees’ selections closer to the employees’ optimal choices?

This first analysis allows us to peer into the black box of employee decision-making and identify what behavioral finance concepts are at play in the group benefits arena. Using information from 24 in-depth telephone interviews, we gain important insight into how employees determine whether to buy supplemental life and supplemental long-term disability insurance, how they decide how much to buy, what they liked and understood from their employer’s presentation, and what features might make these insurance benefits more appealing to the individual.

Suggested Citation

Coe, Norma and Belbase, Anek, How Do People Decide on Life Insurance and Long-Term Disability Insurance Coverage? (June 2015). Available at SSRN: https://ssrn.com/abstract=2613065 or http://dx.doi.org/10.2139/ssrn.2613065

Norma Coe (Contact Author)

University of Pennsylvania - Perelman School of Medicine ( email )

423 Guardian Drive
Philadelphia, PA 19104
United States

Anek Belbase

Boston College - Center for Retirement Research ( email )

Boston, MA
United States

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