People avoid insurance because they think it won't pay, costing them 16% of their wealth
What happened
People avoid buying insurance for things like life, retirement, and long-term care because they worry companies won't pay. This distrust costs them 16% of their median wealth and keeps them from getting financial benefits.
Why it matters
Insurers have long struggled to sell more policies for life, retirement, and long-term care. This paper shows that people avoid these products because they do not trust companies to pay claims. If that distrust disappeared, people would buy much more insurance, hold less cash, and gain significant financial security.
The signal
Watch for insurance companies to start advertising campaigns or new product features that explicitly address how they handle claims, or for regulators to propose new rules around claims transparency.