Unveiling the Influence of Behavioural Biases on Life Insurance Investment Decisions: An Empirical Study

Abstract

In the present financial landscape, Life insurance is different from other financial products because it protects you and lets you invest at the same time. It's hard to pick the best life insurance plans because there are so many different policy options, benefits, and long-term financial commitments. Most people don't get life insurance just for protection and investment purpose, but, emotional, cognitive, and psychological factors also influence their investment decisions. This study examines the impact of behavioral biases, specifically herding and framing biases, on life insurance investment decisions. The present study employs a descriptive and quantitative research design, primary data from 400 life insurance policyholders in the state of Haryana were collected and analyzed using SPSS, indicating that herding bias and framing bias significantly influenced life insurance investment decision.  Framing bias stands out as the most significant bias or factor influencing investment decision. The results indicate that approximately 69.6% of the variability in these decisions can be attributed to such biases. Investors should understand about behavioral biases so that they can make better choices.