Part 3 of this article series explores why the future success of CI products also depends on behavioral factors that influence consumer decisions, underwriting outcomes, and long-term engagement. Part 1 explored how medical science is reshaping the critical illness (CI) landscape. Part 2 focused on actuarial science – because even the most clinically sophisticated CI product will fail if it cannot remain affordable, sustainable, and fit for purpose over time.
Critical illness (CI) remains a cornerstone protection product across many Asia Pacific (APAC) markets. Yet persistent underinsurance highlights a central challenge: Even where awareness is high, many consumers remain unprotected or under-protected.
In Hong Kong, for example, one estimate suggests six in 10 people lack CI coverage.1 In Singapore, one of Asia's most developed insurance markets, a 2022 protection gap study found that nearly three-quarters of critical illness protection needs remain unmet, highlighting the persistence of underinsurance even where awareness and insurance penetration are relatively high.2
This gap is not solely a function of price, product availability, or distribution. It reflects something more fundamental: CI can be designed more effectively around how humans actually think and behave.
Behavioral science helps close the gap. It sheds light on how people perceive risk, process complexity, and make decisions about uncertain future events. As CI evolves alongside advances in medicine – toward longer treatment journeys and more chronic conditions – embedding behavioral insights across the customer journey has become critical to success.
Even when consumers acknowledge their need for protection, they face a second barrier: complexity. CI products have grown more sophisticated, adding layers such as multiple conditions, severity tiers, and benefit structures. While technically valuable, this can overwhelm buyers.
This link between complexity and engagement is echoed in RGA’s recent research on senior insurance consumers across Asia, which found that many older adults struggle to access products that meet their needs because offerings are difficult to understand.
For example, Chinese respondents reported that difficulty understanding policies is their top barrier to pursuing three types of insurance: life, private health, CI. Apart from premium cost, Taiwanese seniors said complex and confusing policy language is their top barrier to purchasing CI, life, or private health insurance.
RGA’s research on the needs and experiences of senior consumers aligns with a broader body of behavioral economics research on consumer decision-making. Complexity introduces decision friction, which may reduce conversion rates.
When customers struggle to understand a product’s purpose or how it works, they are more likely to not engage, postpone their research or abandon the purchase entirely. Research across financial products shows that when decision-making becomes too complex, participation drops significantly unless the process is simplified.
For example, a National Bureau of Economic Research (NBER) study found that simplifying a complex retirement savings decision by offering employees a single, pre-selected enrollment option dramatically increased participation. In one company, this "Quick Enrollment" approach tripled 401(k) enrollment among new hires, while similar simplification efforts increased participation among existing nonparticipants by 10 to 20 percentage points, demonstrating how reducing cognitive burden can translate directly into higher action rates.3
Complexity does not arise only from product design. Consumers may also find the underlying risk difficult to interpret, particularly when assessing an uncertain event that could occur years in the future.
People often underestimate their personal likelihood of experiencing adverse health events, a tendency known as optimism bias. Research also suggests that comparative optimism, the belief that others are more likely to experience harm, can be associated with lower adoption of protective behaviors.4 When consumers view serious illness as distant or unlikely to affect them personally, they may postpone protection decisions or disengage from them altogether.
Traditional risk communication can add to this difficulty. Incidence rates, probabilities, and other statistics may be hard to translate into a personally meaningful understanding of risk, particularly when they require consumers to interpret small probabilities, ratios, or proportions. For CI, the challenge is not simply to communicate the likelihood of diagnosis, but to help customers understand what serious illness could mean for their finances, family, recovery, and ability to earn an income.
Insurers can simplify this decision by making risk more concrete and personally relevant. Rather than relying only on incidence statistics, communications can use relatable scenarios that link protection to consumers’ personal needs in vivid ways. Real-world examples illustrate the potential financial consequences of diagnosis, treatment, recovery, and longer-term survival. The objective is not to heighten fear, but to help customers form a clearer and more useful understanding of the risk so they can evaluate their need for protection with confidence.
Behavioral insights consistently show that simplifying choices increases participation. For example, the same NBER report found that separating a complex retirement decision into simpler components can increase participation by reducing the number of choices consumers must evaluate at once. CI faces a similar issue: Customers are often asked to make multiple decisions simultaneously – coverage levels, product structures, optional features – before they fully understand whether the product meets their needs.
Yet simplification does not necessarily mean removing product features or reducing customer choice. As behavioral science research has shown, many insurance products contain inherent complexity that is essential to delivering value; the challenge is making that complexity easier to navigate and understand.
As RGA's behavioral science research suggests, the goal is to bring order to complexity through practical design and communication techniques, including:
Simplified customer journeys, combined with clearer explanations, can help re-energize demand by making CI products more accessible and easier to understand. especially relevant in digital channels, opportunities to explain complex features are limited.
Behavioral science suggests that underwriting can be simplified without reducing its rigor. The goal is not necessarily to ask fewer questions, but to make the disclosure process easier for customers to understand and complete accurately.
Traditional underwriting relies heavily on self-disclosure, yet responses are often inaccurate due to misunderstanding, ambiguity, or self-perception biases. For example, someone who smokes only occasionally may not identify as a "smoker," leading to underreporting. These disclosure gaps can affect both pricing accuracy and portfolio performance.
Research from RGA's Behavioral Science team shows that thoughtfully designed forms can improve both customer experience and disclosure quality. In one RGA study, more structured, checklist-based questions were perceived as quicker and easier to complete than simpler free-text questions, even though they actually took slightly longer. Participants were also less likely to omit information and provided more complete disclosures, demonstrating that how questions are presented can matter more than the number of questions asked.
Rather than removing underwriting complexity, these approaches help bring order to it, making the process feel simpler for customers while generating more accurate information for insurers.
Many conditions covered by CI have strong behavioral drivers, including lifestyle choices, preventive care, treatment adherence, and ongoing disease management. As CI products expand beyond financial protection to support prevention, recovery, and long-term health management, insurers will need to recognize a fundamental challenge: managing health behaviors is difficult.
This becomes particularly relevant as insurers explore their role in areas such as chronic disease management and medication adherence.
For example, adherence remains a well-documented challenge across many treatments, including newer therapies such as GLP-1 medications.
Whether delivered through human coaching, adviser engagement, or digital health programs, behavioral interventions can help individuals stay engaged with treatment plans, leading to better health outcomes for customers and potentially improved risk outcomes for insurers.
If CI products take on a role in supporting disease prevention through promoting healthy lifestyles, insurers will need to apply behavioral science to understand and influence health behaviors. Behavioral science shows that sustained behavior changes rarely occur through information alone. Successful programs typically combine behavioral design techniques such as:
These approaches help people maintain desired behaviors long after their initial motivation fades.
Programs that incorporate these evidence-based behavioral principles are more likely to generate meaningful and lasting impact. Without them, initiatives may achieve strong initial enrollment but struggle to sustain engagement over time.
An important consideration is that participation in health programs often reflects self-selection. Individuals who choose to engage are frequently already more proactive about their health than the broader population. While these programs can still create significant value, understanding this dynamic is essential when measuring outcomes, identifying who benefits most, and designing interventions capable of reaching less-engaged populations.
Advances in medical science are making critical illness products more sophisticated, expanding coverage, improving treatment pathways, and creating new opportunities to support customers throughout their health journeys. Yet as products become more capable, they also risk becoming harder for customers to understand, buy, and use.
The challenge for insurers is therefore not necessarily to remove complexity, but to bring order to it. RGA's behavioral science research shows that people engage more effectively when decisions are structured intuitively, information is presented clearly, and complex tasks are broken into manageable steps. These principles can help insurers preserve the value of modern CI products while making them easier for customers to navigate.
This need for simplification extends across the entire customer journey:
Helping consumers understand evolving financial and health risks, recognize protection needs, and navigate product choices with confidence.
Improving disclosure quality and risk assessment through clearer questions, better sequencing, and more customer-friendly application experiences.
Supporting sustained engagement with prevention, treatment, and disease-management programs through evidence-based behavioral strategies.
Ultimately, the future success of CI may depend not only on advances in medicine, underwriting, or product design, but on insurers' ability to make those advances accessible to the people they are intended to serve. The next generation of CI products will succeed when they combine sophisticated protection with simple, intuitive customer experiences that reflect how people actually think, decide, and behave.
Read Part 1 of this series, which examines how medical science is reshaping the CI landscape, and Part 2, which addresses how CI products will fail if they cannot remain affordable, sustainable, and fit for purpose over time.
Redesigning CI is not a theoretical exercise – it is a strategic imperative. If you are exploring how to future‑proof your CI portfolio in Asia Pacific, now is the time to start the conversation. Contact us to discuss how actuarial, medical, and behavioral insights can come together to support your CI redesign journey, from near-term optimization to longer-term transformation.
1 https://insuranceasia.com/insurance/news/six-in-10-in-hk-without-critical-illness-insurance
2 https://www.lia.org.sg/media/3972/lia-pgs-2022-press-release_final_8-sep-2023.pdf
3 https://www.nber.org/papers/w11979
4 Kathleen McColl et al., “Are People Optimistically Biased about the Risk of COVID-19 Infection? Lessons from the First Wave of the Pandemic in Europe,” International Journal of Environmental Research and Public Health 19, no. 1 (2022): 436, view the study.
