Purchasing Insurance: Predictors of Family Decision-Making Responsibility

Abstract

Predictors of family decision-making responsibility in the purchase of life, auto, and homeowner insurance were investigated for a sample of 1,462 families. Employment status of the wife and education of the husband were found to discriminate most between which family member(s) is responsible for insurance-purchasing decisions. Other significant discriminating variables included wife's educational level, husband's employment status, family income, and husband's occupation. A high degree of consistency was found in the predictive value of these characteristics across life, auto, and homeowner insurance. Findings suggest that the decision maker within the family can be identified based on demographic characteristics. Purchasing life, automobile, or homeowner insurance involves a major purchase decision for many families. After all, with the annual premium paid by most families and the limited alternatives available for spreading risk . . . the importance of the purchase decision [for insurance] would appear substantial [6, p. 483]. The magnitude of importance of the insurance purchase decision is manifested by the dollar value of premiums consumers in the United States pay out each year. For example, in 1980 consumers paid out over $31.7 billion in automobile insurance premiums [3] and more than $10 billion in homeowner insurance premiums [23]. Moreover, between 1975 and 1980 life insurance premiums increased by 39 percent to $40.8 billion [28]. Given that consumers spend sums of money on insurance, a key question facing insurance marketers is who in the family makes the insurance purchase decision. The answer to this question would be instructive in the The authors gratefully acknowledge anonymous referees and the editors for their helpful suggestions on earlier versions of this article. Steven J. Skinner is an Assistant Professor of Marketing at the University of Kentucky, and Alan J. Dubinsky is a Visiting Associate Professor of Marketing at the University of Minnesota. This content downloaded from 157.55.39.177 on Wed, 16 Nov 2016 04:30:36 UTC All use subject to http://about.jstor.org/terms 514 Purchasing Insurance design and implementation of marketing programs directed at insurancepurchasing families. Some previously published research has focused on savings and investment decisions (of which insurance is a part) vis-a-vis family decision making [ 11 ]. For example, prior empirical work has examined the relationship between various demographic variables (such as spouse education, spouse occupation, household income, household net worth, number of children, and life cycle) and amount and type of life insurance purchased and premium expenditures [1, 4, 14, 17, 19, 21]. Other investigations have explored, to some extent, which family member(s) makes the insurance purchase decision. For instance, studies have found that life insurance purchase decisions tend to be husband dominated [ 10, 12, 15]. Childers and Ferrell [6] discovered that in the purchase of auto insurance, the husband was primarily responsible for selecting the company and paying the premium. Additional research has determined that the presence of the wife at the sales interview produced a higher rate of sales [20] and that a family was less likely to buy insurance when the husband and wife discussed the decision in the agent's absence [24]. Although previous empirical work has explored family decision-making responsibility, virtually no published research has examined what characteristics differentiate between families in which the insurance purchase decision is made solely by the husband or entails wife involvement. If such characteristics can be identified, insurance marketers could use these characteristics when tailoring their marketing programs directed at prospective insurance buyers. Thus, additional research is needed to assist insurance marketers in identifying and focusing on the appropriate family decision maker(s). Because of the importance of the topic, a study was designed to complement and extend prior investigations by exploring family decision making for three major kinds of insurance: life, auto, and homeowner. The objective of the research was to identify demographic variables that discriminate between families in which the insurance purchase decision for life, auto, and homeowner insurance is either the husband's sole responsibility or entails wife involvement. The focus was on husband versus wife involvement in insurance-purchasing decisions because Assael [2] has suggested that as more wives enter the labor force, they are likely to have more involvement in many family purchase decisions. In addition, the study examined demographic variables (as opposed to attitudes, for instance) because demographic information is generally available to insurance marketers and their agents.