Fear appeals and mortgage protection insurance – a quantitative study

Managers in charge of sales process designs are constantly in the need to optimise their communication strategy to improve advisory quality and take-up rates. This is especially true for mortgage protection insurance (MPI), where buying insurance means buying an immaterial product that creates a perception of security which protects one of the most important assets in life – one’s home. It is key for a successful advisory to find communication approaches that overcome the psychological barriers of customers. One possible approach is the use of fear appeals, which confront the customer with negative consequences. Despite their widespread use in the public field, and continuous academic interest since the 1950s, the effectiveness of fear appeals remains equivocal. A detailed chronological examination of fear appeal research is presented suggesting that the field of insurance distribution was neglected from research. The effect of specific individual differences (optimism, pessimism, risk-taking) on cognitions, emotions, and behaviour outcomes are identified as gaps in the literature. The primary aim of this thesis was to determine the effectiveness of fear appeals in the context of MPI on behaviour outcomes and on willingness-to-pay to enhance the advisory quality of mortgage salespersons. To achieve this a research framework was developed that utilises the constructs of the Extended Parallel Process Model, conceptualises a fear appeal into three message characteristics (vivid image, message frame, message direction) and integrates individual differences. Using data from a randomised experiment (N = 1,014), the research framework was tested using ANOVAs, t-tests, regression analysis, and PROCESS calculations. The results delivered valuable insights. Firstly, vivid images created fear and uncomfortable feelings but did not influence cognitions or behaviour outcomes. Secondly, cognitive appraisal values indicated that the product information was well suited for business needs. Moreover, perceived susceptibility to a threat, as did optimism and risk-taking, showed a significant positive effect on willingness-to-pay. Lastly, a significantly positive effect was achieved on attitude towards MPI with the integration of the treatment. This project has demonstrated important factors for improving the sales process of MPI salespersons.