Development of utility function for life insurance buyers in the Indian market
Abstract
Insurance as a financial instrument has been used for a long time. The dramatic increase in competition
within the insurance sector (in terms of providers coupled with awareness for the need for insurance) has
concomitantly resulted in more policy options being available in the market. The insurance seller needs to know
the buyer’s preference for an insurance product accurately. Based on such multi-criterion decision-making,
we use a logarithmic goal programming method to develop a linear utility model. The model is then used to
develop a ready reckoner for policies that will aid investors in comparing them across various attributes.
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