Implicit Prioritization of Life Insurance Coverage: A Study of Policyholder Preferences in a Danish Pension Company

Julie Bjørner Søe ()
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Julie Bjørner Søe: Department of Mathematical Sciences, University of Copenhagen, Universitetsparken 5, DK-2100 Copenhagen, Denmark

Risks, 2025, vol. 13, issue 6, 1-17

Abstract: This study evaluates the utility derived by policyholders in a Danish pension company, from their life insurance coverages. We quantify the relative importance policyholders assign to their existing coverages versus a hypothetical complete coverage scenario, thereby measuring the implicit priority of their current coverage. By analyzing these implicit priorities based on individual attributes such as age, financial situation, and company agreement limitations, we gain a comprehensive understanding of policyholders’ evaluations of their current life insurance coverage. Utilizing a continuous-time life cycle model, we optimize consumption and life insurance decisions during the accumulation phase, applying well-established theoretical findings to actual data. Our analysis identifies trends, outliers, and insights that can inform potential improvements in life insurance coverage. This tool aims to assist policyholders in prioritizing their coverage according to their life situations and provides a foundation for advisory dialogues and product development.

Keywords: life insurance; risk aversion preference; stochastic control; life insurance demand; life insurance study (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:13:y:2025:i:6:p:103-:d:1664859

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