The Decoy Effect

Asymmetric dominance sometimes called "The Decoy Effect" is a basic marketing tactic used to help make an item seem less expensive by comparison. Find out how you can use this simple concept to increase life insurance sales.

Charlie Conron
March 13, 2023


Client behaviour can be a tricky thing, on the one hand, we have to make sure we communicate effectively and make it easy for clients to make decisions. Clients today want to feel confident in their decision, they want to feel informed about the products they are purchasing and any alternatives they should consider. Even small changes to the words we use to describe products and their benefits or how we present our material make a huge difference.

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On top of making your pitch easy to understand it's also important to make sure the client has options but not an overwhelming amount of them (you can read more about The Psychology of Choice in the Insurance Buying Process). You see too many options the opportunity cost of picking the wrong product stops them from making the decision and too few makes them feel like they are missing out.


So you may be asking what is the right number of products or solutions to show a client? One well-documented phenomenon in marketing is called the Decoy Effect (or Asymmetric Dominance Effect). This is an effect where consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated.

An option is asymmetrically dominated when it is inferior in all respects to one option, but in comparison to the other option, it is inferior in some respects and superior in others. In other words, in terms of specific attributes determining preference, it is completely dominated by (i.e. inferior to) one option and only partially dominated by the other.

When the asymmetrically dominated option is present, a higher percentage of consumers will prefer the dominating option than when the asymmetrically dominated option is absent. The asymmetrically dominated option is, therefore, a decoy serving to increase preference for the dominating option.

Make sense? If not this visual should help explain!

Decoy Efffect


Ok now that we know what the decoy effect is your probably wondering, so how can we use this concept in my Life Insurance sales? So I wanted to show a few ways you can use this for setting up your presentation. My examples are going to focus on how to present these options in Life Design Analysis but this concept can be used however you present insurance products (just try and keep the message simple).

Get more ideas on how to present insurance solutions to your clients!


Let's look at a few case studies to show how we can use Asymetrical Dominance in a real life setting

Term Insurance

Let's say our clients have just bought a new house. They are young professionals and have a 25-30 year mortgage. Cash flow might determine that Term insurance is the place they need to be but we want them to consider a longer length of term as they have expressed they dislike the medical aspect of insurance and have some family health history that could make reapplication more complicated in the future. We could set up This T10 vs T25 vs T30 presentation and compare it for 25-30 Years. At the 25th year, the Ten and Term 30 will both be more expensive thereby naturally highlighting the value of a term product designed for their specific needs. The other nice thing is that any coverage here would still protect them so there is no wrong choice.

Permanent Insurance

Let's say we believe our client needs permanent insurance. However, we know they don't have the cash flow to support PUA Whole Life. Instead of just showing them a quote for Universal Life and saying this is the one they will buy, you might try this concept using the decoy effect. Set up a Term 10 vs. Universal Life vs. Whole Life comparison. The Term and Whole Life Products will asymmetrically dominate the Universal Life that we know fits the client's needs the best. However, we are giving them the options that they crave.

Maybe you have a corporate client or someone you feel should fund as much as they possibly can into whole life to maximize tax sheltering. You know they can afford the full PUA option but you're not sure about ado, you could present 3 different funding options like this case with an Enhanced Whole Life vs Stock 20 Pay PUA vs 20 Pay PUA with additional deposits. The ADO option shows the best bang but may be out of their comfortable price range making the middle option look the most appealing to them.

Term Conversion

A term conversion is a great scenario to highlight asymmetrical options, simply review the clients existing term policy to their conversion options. As a bonus LDA can automatically manage and mine your block of business! In this example I highlight the advantage of converting to permanent product using a min funded UL and whole life but any sort of compare that gives them clearcut options.


I could think of endless examples because there is generally more than one way to solve an insurance need and a lot of the final decisions is dependent on how much the client is willing and able to pay, however by designing multiple acceptable suitable options (MESO) we can get to a Yes! faster and by using asymmetrical dominance we can help them see the value in the product we think is most suitable for their needs. At the end of the day, there is no wrong answer as long as your clients are getting the protection they need.

Sign in or sign up and try using this concept to increase sales and get in touch or book a training session with Jon or Nik from our support staff to see how Life Design Analysis can help your practice.