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Time and Trouble: The Psychology of Direct-to-Consumer Life Applications

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What You Need to Know

  • Online application systems may give consumers too much time to think about what the insurer wants to hear.
  • Time pressure can hurt, too, by increasing the influence of mental shortcuts and biases.
  • Sometimes, applicants really are confused.

Here’s the third in a series of three articles about what behavioral science can tell us about the life insurance application process.

Yesterday, we looked at how emotions affect how well direct-to-consumer life insurance application processes work.

This article focuses on how question difficulty affects online disclosures.

Application process designers also need to account for how people process information.

The human capacity to process information is limited, and, for most people, paying attention to more than one task at a time is difficult.

1. Time to Game the Application

Psychologists Aldert Vrij and Samantha Mann, in a 2001 article, discussed how formulating a deception often takes time and mental resources.

Unlike live conversations, online application forms give applicants time to consider how to respond.

This means there is greater potential for applicants to take time to fill out the application and think abstractly about how to “game” it, whereas in-person advisor-led interviews and telephone interviews limit the time applicants have to think through a response.

For example, consider the effort it might take to think about how to answer an alcohol intake question in order to get more favorable underwriting, then to adjust from your actual alcohol intake to give an answer you believe might produce a better result.

Online applicants have more time to devote to that kind of effort, and that clearly could lead to lower disclosure rates.

Researchers have shown that prosocial behavior (i.e., behavior through which people benefit others) is intuitive and quick, and people tend to need time to counteract prosocial impulses in order to formulate more self-interested decisions.

Deception, as mentioned earlier, is more cognitively taxing than honesty.

Hence application channels that allow more thinking time, such as online forms, could lead to lower disclosure rates as applicants could potentially formulate more self-interested responses.

Similarly, advisers taking applicants through forms are experienced with using these applications and therefore require fewer mental resources to consider how to phrase questions.

This also leaves room for adviser paraphrasing, which could lead to lower disclosures.

2. Pressure to Simplify

On the other hand, if the applicant’s time pressure and cognitive load increase because, for example, the applicant is working with an agent or representative, that may force the applicant to respond intuitively. That may increase the influence of intuitive mental shortcuts and biases such as social desirability.

This was shown in a U.S. study of 1,500 individuals, which found that those encouraged to respond to a survey quickly were more likely to respond in ways that boosted their social desirability.

Hence, an applicant who might otherwise be motivated to be accurate could, if experiencing time pressure, be more likely to intuitively answer “no” to sensitive questions such as whether they have used illegal drugs.

Because time pressure restricts the mental resources available to make decisions, people, when under pressure, will use simplification strategies such as satisficing — in other words, choosing an acceptable, rather than perfect, answer.

People facing time pressure will also be less likely to consider a problem carefully. It can therefore be difficult for applicants to be accurate if a question needs some calculation, such as the average number of drinks consumed per month, or to recall information such as their weight.

In these cases, applicants might guess, or formulate a “good enough” answer, increasing the chance of unintentional inaccuracy.

We conducted another experiment which put people under time pressure to answer insurance-type questions under incentives to lie:

Disclosures of Mental Health Conditions, Drug and Tobacco Use
No time limit
Time limit
Tobacco (ever used) Cigarettes 56.0% 53.0%
Other tobacco 42.0% 33.0%
Illegal drug use (ever used) Amphetamines 17.0% 10.0%
Cannabis 30.0% 23.0%
Cocaine 17.0% 12.0%
Ecstasy 16.0% 9.0%
Hallucinogens 14.0% 8.0%
Opioids 8.0% 4.0%
Other drugs 12.0% 5.0%
Performance-enhancing drugs 10.0% 5.0%
Mental health Anxiety 27.0% 22.0%
Depression 26.0% 21.0%

We found that the time pressure resulted in reduced disclosures overall for most questions perhaps because it forced participants to answer intuitively while strongly influenced by social desirability bias and unintentional mistakes.

3. Hard Questions

Finally, genuine mistakes resulting from a misunderstanding of questions can also lead to lower disclosure rates.

A disadvantage of digital application forms completed alone by the applicant is the lack of interactive support when needed.

Often help text can be highly accurate, as it is displayed as the insurer intended.

However, if an online form lacks suitable help text or other support, applicants may be more likely to make genuine mistakes.

Advisers and insurance company representatives have a high capacity for being able to explain over the telephone questions for customers who get stuck or misunderstand.

However, as indicated earlier, they may be susceptible to paraphrasing the needed clarifying information, leading to help that could result in mis-disclosure.

Our previous research showed that making online questions simpler to process not only improves disclosure rates but also speeds up the application process.

What makes questions “simpler,” however, is not always obvious, and is sometimes conflated with providing “fewer” questions.

For example, the question “On average, how many alcoholic drinks do you consumer per week?” is more difficult to answer than “On average, how many bottles of beer do you consume per week?” followed by “On average, how many glasses of wine do you consume per week?”

Although splitting drink types into sub-categories creates more questions on an application, the net effect is better disclosure.

Why? The need for less thought (i.e., calculation) on the part of the applicant.

Our research shows that these more precise question types not only improve disclosures but also the speed at which applicants can complete the form, suggesting an easier experience.

What This All Means

The life insurers you work with need to understand the effects of new direct-to-consumer underwriting strategies  from a behavioral science perspective.

Behavioral science suggests that benefits of a digital application model include the increase in psychological distance between the customer and insurer, which reduces applicant embarrassment.

But there are still risks, such as the risk that applicants will get more time to “game” the application process, or have trouble understanding application questions.

We strongly encourage insurers to embrace behavioral science-led approaches to designing applications that could maximize disclosure while mitigating these risks.


Peter Hovard (Photo: RGA)Peter Hovard is the lead behavioral scientist for global data and analytics at Reinsurance Group of America.

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