Protective Behavior and Life Insurance

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The Wharton School::Wharton Pension Research Council::Wharton Pension Research Council Working Papers
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Discipline
Economics
Subject
Life insurance
advantageous selection
adverse selection
health shocks
preventive behavior
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Copyright date
2024
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Author
Hurwitz, Abigail
Contributor
Mitchell, Olivia S.
Sade, Orly
Abstract

We study life insurance market responses to Covid-19 using unique national administrative data from Israel on purchases and cancellations of life insurance policies, and an internet survey of Americans’ life insurance choices, risk attitudes, Covid-19 perceptions, and vaccination behavior. We see no evidence that life insurance purchases or cancellations were consistent with adverse selection during the pandemic, while we do find advantageous selection. Moreover, life insurance policyholders were more likely to get vaccinated, thus taking ex-post preventive action reducing their pandemic risk. Such positive reactive behavior has not been previously reported in the life insurance setting.

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WP2024-01
Publication date
2024-01-16
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