The income protection gap is defined as
the reduction in household income as a consequence of the death or incapacitation of an adult wage earner on whom that household relies, taking all public and private sources of replacement income into account.1
Loss of household income due to illness, disability, or premature death can be devastating. Under-insurance for unplanned interruptions in income is an important research topic as it manifests the inherent behavioural biases individuals can face when it comes to choosing insurance policies that protect their household income. At the same time, with governments around the world cutting back on social protection programmes, there is growing interest in the potential of employer- and household-sponsored schemes to this gap.
This project accordingly seeks to understand the specific macro- and micro-level drivers of under-protection. By considering equally underlying demographic and macroeconomic trends, the role of government and employers, and the behaviours associated with household financial decision-making, our research aims to derive fresh insights for behavioural economics and social protection policy alike.