The Market Pricing of Disability Income Insurance for Individuals

Authors

  • Larry A. Cox The University of Mississippi, Department of Economics and Finance, 301 Conner Hall, University, MS 38677.
  • Sandra G. Gustavson The University of Georgia, Faculty of Risk Management and Insurance, 206 Brooks Hall, Athens, GA 30602-6255.

DOI:

https://doi.org/10.1016/1057-0810(95)90006-3

Abstract

Individuals ’ needs for disability income insurance dominate thosefor life insurance, yet relativelyfew buyersandsellersenterintodisabilitycontractscomparedtolifecontracts. This phenomenon appears contradictory to the existence of a workably competitive market. This study examines the relation of disability income insurance prices to underlying contractual and insurer characteristics. Our results are supportive of a competitive market scenario. We observe a strong relation between prices and elimina- tionperiods, which isconsistentwiththepresence ofadverse selection. Our resultshave implicationsfor how individuals should choose some policy and insurer characteristics, but they also suggest that buyers may need to be better informed about other pricing factors.

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Published

1995-12-30

How to Cite

Cox, L. A., & Gustavson , S. G. (1995). The Market Pricing of Disability Income Insurance for Individuals. Financial Services Review, 4(2), 109–122. https://doi.org/10.1016/1057-0810(95)90006-3

Issue

Vol. 4 No. 2 (1995): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1995 JAI Press Inc.

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