Effect of financial literacy on purchasing decision of life insurance policy in nepal

Abstract

This study has explored public perception towards life insurance purchasing decisions in Nepal, focusing on the influence of financial literacy. A mixed research design, combining descriptive and causal-comparative approaches, has been employed. The total population considered for Kathmandu valley, with a sample of 385 respondents selected through convenience sampling. Primary quantitative data was collected using a structured questionnaire measured on a five-point Likert scale. Data analysis involved the use of statistical tools such as descriptive statistics, correlation analysis, and multivariate regression, facilitated by software like Microsoft Excel and SPSS. The research framework identified financial literacy, intention, attitude, access, and benefits as independent variables, with purchase of life insurance as the dependent variable. The findings have revealed that all independent variables have a positive and significant relationship with the purchase of life insurance, with perceived benefits exerting the strongest influence. Financial literacy, access, attitude, and intention also significantly impact the decision to buy life insurance, confirming their roles as key determinants. This study provides practical and theoretical insights by emphasizing the importance of enhancing financial literacy, improving access to insurance services, and promoting awareness of life insurance benefits. It recommends targeted education programs and improved service accessibility to encourage greater participation in life insurance markets. These steps can guide policymakers, insurers, and educators in strengthening insurance uptake. Keywords: financial literacy, intention, attitude, access, benefits, purchase of life insurance