We know that the main reason individuals buy life insurance is to provide financial support to their loved ones after their death.
But researchers at the Max Planck Institute for Human Development in Berlin, Germany, recently discovered the reason behind the reason people buy life insurance. And it says a lot about human behavior.
According to the Max Planck Institute, when considering the future, risk-averse people are more likely to bury their heads in the sand instead of seeking out the appropriate information to deal with future risks. And these people are more likely to buy life insurance than those who aren’t as risk-averse.
Would you want to know?
The Max Planck researchers surveyed 2,000 people about what they would want to know about the future, if they had the chance. More than 85% of respondents said they would not want to know when a negative event – such as a divorce or the death of a loved one – was coming. (Interestingly, many also said they would prefer to remain ignorant of positive events. Only 1% of participants consistently wanted to know about future events – positive or negative.)
The researchers then tested several scenarios arising from these findings, including the notion that the people who would rather not know are more risk-averse and more likely to buy life insurance. The testing proved that to be true.
We can all learn from this. If you are inclined to avoid thinking about the future, particularly potentially negative events, you may be more likely to invest in life insurance. The opposite may also be true.
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Not afraid of the future?
Life insurance is important. As noted above, it provides essential financial support to your loved ones after your death. Even if you aren’t risk-averse and you don’t have life insurance, you may want to discuss whether it’s appropriate. Your loved ones’ future may depend on it.