I used my dev account and tested it.
Apparently insanity areas cause Daniel to hear things if his sanity is low enough. I was using the testing mode so i brought Daniel sanity to 0 and in the corner it said "Starting insanity event whispering" and soon i was hearing whispers.
I also experienced other things such as some type of small duration flashback.
Probably makes bugs crawl on screen as well.
Didn't notice any other effects. So just place them in dark scary areas so the player will start to hear stuff there.
They can also be set so they will only trigger once.
Hmmm think i'm going to make a creepy area where the player has to go and put a insanity effect while they solve a puzzle.