Investment guarantees in financial products: an analysis of consumer preferences

Daliana Luca, Hato Schmeiser () and Florian Schreiber
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Daliana Luca: Helvetia Insurance Group
Hato Schmeiser: University of St. Gallen
Florian Schreiber: Lucerne University of Applied Sciences and Arts

The Geneva Papers on Risk and Insurance - Issues and Practice, 2023, vol. 48, issue 4, No 7, 906-940

Abstract: Abstract We analyze the preferences of 1180 German consumers for investment guarantees in financial products by means of choice-based conjoint and latent class analysis. Based on the segment-level partworth utility profiles, we then identify the most important investment guarantee features, analyze consumer demand in a realistic market setting, and test whether individual purchasing behavior can be explained by socioeconomic characteristics. Our results show that two buyer and two nonbuyer segments exist. Although their willingness to buy varies significantly, we document only a small degree of heterogeneity with respect to the individual guarantee attributes and levels. Across the sample, the guarantee period is most important, followed by the volatility of the underlying fund, and the up-front premium. Finally, we illustrate that particularly those socioeconomic characteristics with an impact on individuals’ financial situation are promising predictors of their willingness to purchase investment guarantees.

Keywords: Finance; Consumer preferences; Investment guarantees; Individual savings; Choicebased conjoint analysis (search for similar items in EconPapers)
JEL-codes: G11 G22 G28 G32 G38 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41288-022-00268-4

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