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Price Presentation and Consumers' Choice

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abstract Currently, regulatory authorities and consumers ask for more cost transparency with respect to financial product components. In life insurance, for instance, the premium for products should be split in its components: A premium for death benefits, the savings premium, the cost of an investment guarantee, and the administration costs. In this regard, it is important for insurance companies and regulators to know to what extent the way of presenting the prices of an offer affects consumer evaluation of the product. Based on a paper by Huber et al. (How do price presentation effects influence consumer choice? The case of life insurance products. Working paper, 2011) as presented at the annual meeting of Deutscher Verein für Versicherungswissenschaft in 2011, this article presents the effects of different forms of presenting the price of life insurance contract components and especially of investment guarantees on consumer evaluation of this product. This is done by means of an experimental study using a representative panel for Switzerland and by focusing on unit-linked life insurance products. The findings reveal that, contrary to consumer products, there is no effect of price bundling and price optic on consumer evaluation and purchase intention for life insurance products. However, there is a significant moderating effect of consumer experience with insurance products on this relationship.
   
type journal paper
   
keywords
   
language English
kind of paper journal article
date of appearance 2-2012
journal Zeitschrift für die gesamte Versicherungswissenschaft
publisher Springer Verlag (Heidelberg)
ISSN 0044-2585
ISSN (online) 1865-9748
DOI 10.1007/s12297-011-0181-z
volume of journal 101
number of issue 1
page(s) 63-73
review double-blind review
   
citation Schmeiser, H., Huber, C., & Gatzert, N. (2012). Price Presentation and Consumers' Choice. Zeitschrift für die gesamte Versicherungswissenschaft, 101(1), 63-73, DOI:10.1007/s12297-011-0181-z.