Empowering informed life insurance decisions: the impact of financial literacy on framing effects

Abstract

This study investigates the impact of financial literacy on consumers’ intention to purchase life insurance policies with a framing effect. Although life insurance companies use framing to nudge consumers, this marketing tactic fails to foster long-term relationships and informed decisions. The study introduced a financial literacy education comparing the benefits of life insurance with traditional banking instruments. Using a rating-based conjoint analysis experiment, the effects of financial literacy on premium and benefit framing were tested and analyzed with three-way ANCOVA and Hayes Process. Results indicate that financial literacy significantly increases purchase intention for policies with monthly premiums and aggregate benefits.