FACTORS INFLUENCING IN PURCHASE BEHAVIOR OF LIFE INSURANCE POLICIES

Abstract

Life insurance purchasing behavior is about the purchase behavior shown by policyholders while purchasing life insurance policies. With the increase in life expectancy of the people, they go through different life cycle event like marriage, childbirth, unexpected event like sudden demise of a family member, which lead them to purchase life insurance policy to minimize the uncertainty. All these events and human behavior has gained increased attention of the researchers as well as policymakers because it directly challenges the country’s insurance industry and its contribution to national gross domestic product. So, life insurance policy at individual level has been a necessity for every individual to live a secured life. However, there are various demographic as well as other factors affecting individuals’ life insurance purchase behavior. This study seeks to examine the impact of financial literacy and saving motives on the behavior of purchasing life insurance. This study relies on primary data gathered through a structured questionnaire, with a total of 387 samples included. The data has been analyzed using Statistical Package for Social Science (SPSS) and MS Excel software. Descriptive statistics, correlation analysis, and regression analysis were performed to derive the findings. The findings of the study suggest that financial literacy, precautionary motives, and bequest motives factors have significant influence on life insurance purchasing behavior; influence of precautionary and bequest being higher than that of financial literacy. Likewise, different life cycle events lead to purchase of multiple life insurance policies. The individuals’ life cycle motive and wealth accumulation motive are found having insignificant influence on their life insurance purchase behavior. Additionally, a correlation was found between individuals' financial literacy, life cycle motive, precautionary motive, wealth accumulation motive, bequest motive, and life insurance purchasing behavior.