This paper uses a theoretical framework based on the Constant Absolute Risk Aversion (CARA) utility and bequest functions to capture individual risk attitudes under uncertainty. It examines gender-based differences in risk aversion and selection effects in Iranian life insurance market, with a focus on the coexistence of adverse and advantageous selection. The study uses software-based simulations and sensitivity analyses to examine equilibrium outcomes under different levels of processing costs and risk aversion among low-risk individuals.

Survey data from 400 policyholders provide empirical support and reflect actual market behavior. The evidence shows that male policyholders are more risk-averse than female policyholders, leading to advantageous selection, as more risk-averse individuals are more likely to purchase life insurance. The results also show that higher processing costs accelerate the shift from adverse selection to advantageous selection. Similarly, greater risk aversion among low-risk individuals speeds up this transition. The difference in risk aversion between low-risk and high-risk individuals also determines how quickly the shift occurs. Overall, the results provide evidence of advantageous selection in an emerging market and offer practical insights for insurers on gender-responsive pricing and risk management.