This research investigates the divergence between subjective risk perception and objective actuarial risk during the "Iron Swords" war in Israel. As life expectancy continues to rise and demographic structures shift, the financial resilience of individuals and the stability of national social security systems depend heavily on accurate risk assessment and adequate insurance coverage.

The study utilizes a quantitative analysis of survey data (N=442) categorized into three cohorts: combat reservists, their immediate family circles, and the general public. We employed logistic regression models to identify predictors of life insurance purchase intentions and evaluated financial literacy levels across these groups.

The results reveal a significant "Knowledge Illusion" among high-risk populations. Combat reservists demonstrated a profound gap between their perceived and actual insurance literacy (P < 0.01), suggesting that those at the highest objective risk are the most prone to behavioral biases. Furthermore, the findings identify a "Neighbor Effect," where purchase intentions are driven more by social proximity to risk than by individual exposure.

Significance: From an actuarial and policy perspective, these behavioral gaps represent a systemic risk to the National Insurance Institute (NII) and the broader pension system. When high-risk cohorts remain under-insured due to cognitive biases, the long-term financial burden shifts to state-funded safety nets. We propose that addressing these gaps requires the integration of Automatic Adjustment Mechanisms (AAMs) and default enrollment schemes. Such interventions are essential to ensure the actuarial stability of the social security framework, especially as the system faces the dual challenges of prolonged geopolitical instability and an aging population.