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.