Term Life Insurance in Germany: The Consumers' Perspective - A Need for Preferences-Orientated Product Design?

People in many countries are under- or even uninsured against premature death. Germany, where the mortality protection gap is EUR 110 000 per working person with dependents, is no exception. Many Germans choose not to buy life products such as term insurance, despite it being very affordable. There is no simple explanation for this. A wide range of factors influence consumer behaviours. The good news is that these can be investigated. Indeed, insurers are well-positioned to extend the reach of their products and services across society at large with better understanding of their consumers.

This study is a joint exercise by Swiss Re and the Institute for Insurance Economics (University of St. Gallen). It demonstrates a means by which insurers can develop greater appreciation of the factors behind buying decisions, such as the product features that create value for consumers, and how much people are willing to pay for term insurance, information that can help instruct the design of effective business strategy.

The methodology used is choice-based conjoint (CBC) analysis. CBC is a
state-of-the-art approach to understanding consumer preferences. It is the Analysis of consumers' stated preferences in a hypothetical market or decision-making environment. CBC has been used to good effect in other industries. This study is the first-ever application of CBC in the term life insurance context, the intent being to generate similarly valuable results.

The study is part of the Swiss Re consumer research series. It is the coming together of academics and industry experts with in-depth knowledge of the German insurance sector to help our clients navigate the market.