The determinants of life insurance ownership : the mediating effect of risk perception

The conventional life insurance and family Takaful market penetration rate was at 54.6 percent in 2015 indicating that about half of the Malaysian population is still uninsured. This study is conducted to investigate (a) the relationship of life insurance ownership with demographic and psychographic...

Full description

Saved in:

Bibliographic Details
Main Author:	Tan, Suang Sin
Format:	Thesis
Language:	eng eng
Published:	2018
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/7647/1/Depositpermission_s94688.pdf https://etd.uum.edu.my/7647/2/s94688_01.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.7647
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Lim, Chee Chee
topic	HG Finance
spellingShingle	HG Finance Tan, Suang Sin The determinants of life insurance ownership : the mediating effect of risk perception
description	The conventional life insurance and family Takaful market penetration rate was at 54.6 percent in 2015 indicating that about half of the Malaysian population is still uninsured. This study is conducted to investigate (a) the relationship of life insurance ownership with demographic and psychographic factors, and (b) the mediating effect of risk perception on the relationship between psychographic factors (i.e. personal value, risk attitude and trust) and life insurance ownership. A stratified random sampling technique was used to collect data from July to December 2015 in the four states located at the Northern regions of Malaysia, namely Kedah, Perlis, Penang and Perak. A total of 408 individuals approached at their work places and shoppers intercepted in the malls were surveyed. The data collected were analysed using binary logistic and multiple regressions. The respondents in their 20’s and 30’s are found more likely to own life insurance as compared to the respondents aged below 20 years old. Most of the life insurance policyholders are males, Chinese and Indian, and those who are middle income earners. The findings on psychographic factors show that trust has a significant positive relationship with life insurance ownership, and there is a significant mediating effect of risk perception on the relationship between trust and life insurance ownership. The respondents who trust their life insurance agents are found to have low risk perception of the purchase of life insurance. Thus, they tend to own life insurance. This study proposes that extensive ownership promotions of family Takaful and micro-insurance be targeted to Muslim individuals and low-income earners. The actions in fulfilling prospective policyholders’ needs, building trust in life insurance agents and creating awareness about the importance of life insurance are vital to encourage those who do not own life insurance to purchase life insurance.
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Tan, Suang Sin
author_facet	Tan, Suang Sin
author_sort	Tan, Suang Sin
title	The determinants of life insurance ownership : the mediating effect of risk perception
title_short	The determinants of life insurance ownership : the mediating effect of risk perception
title_full	The determinants of life insurance ownership : the mediating effect of risk perception
title_fullStr	The determinants of life insurance ownership : the mediating effect of risk perception
title_full_unstemmed	The determinants of life insurance ownership : the mediating effect of risk perception
title_sort	determinants of life insurance ownership : the mediating effect of risk perception
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2018
url	https://etd.uum.edu.my/7647/1/Depositpermission_s94688.pdf https://etd.uum.edu.my/7647/2/s94688_01.pdf
_version_	1747828248204541952
spelling	my-uum-etd.76472021-08-11T07:41:03Z The determinants of life insurance ownership : the mediating effect of risk perception 2018 Tan, Suang Sin Lim, Chee Chee Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance The conventional life insurance and family Takaful market penetration rate was at 54.6 percent in 2015 indicating that about half of the Malaysian population is still uninsured. This study is conducted to investigate (a) the relationship of life insurance ownership with demographic and psychographic factors, and (b) the mediating effect of risk perception on the relationship between psychographic factors (i.e. personal value, risk attitude and trust) and life insurance ownership. A stratified random sampling technique was used to collect data from July to December 2015 in the four states located at the Northern regions of Malaysia, namely Kedah, Perlis, Penang and Perak. A total of 408 individuals approached at their work places and shoppers intercepted in the malls were surveyed. The data collected were analysed using binary logistic and multiple regressions. The respondents in their 20’s and 30’s are found more likely to own life insurance as compared to the respondents aged below 20 years old. Most of the life insurance policyholders are males, Chinese and Indian, and those who are middle income earners. The findings on psychographic factors show that trust has a significant positive relationship with life insurance ownership, and there is a significant mediating effect of risk perception on the relationship between trust and life insurance ownership. The respondents who trust their life insurance agents are found to have low risk perception of the purchase of life insurance. Thus, they tend to own life insurance. This study proposes that extensive ownership promotions of family Takaful and micro-insurance be targeted to Muslim individuals and low-income earners. The actions in fulfilling prospective policyholders’ needs, building trust in life insurance agents and creating awareness about the importance of life insurance are vital to encourage those who do not own life insurance to purchase life insurance. 2018 Thesis https://etd.uum.edu.my/7647/ https://etd.uum.edu.my/7647/1/Depositpermission_s94688.pdf text eng public https://etd.uum.edu.my/7647/2/s94688_01.pdf text eng public http://sierra.uum.edu.my/record=b1698856~S1 Ph.D. doctoral Universiti Utara Malaysia Angko, W. (2013). Social protection and the demand for private insurance in Ghana. Research Journal of Finance and Accounting, 4(13), 130-145. Annamalah, S. (2013). Profiling and purchasing decision of life insurance policies among married couples in Malaysia. World Applied Sciences Journal, 23(3), 296-304. Arun, T., Bendig, M., & Arun, S. (2012). Bequest motives and determinants of micro life insurance in Sri Lanka. World Development, 40(8), 1700-1711. Bank Negara Malaysia. (2013). Financial Services Act 2013. Retrieved from http://www.bnm.gov.my/index.php?ch=en_ legislation&pg=en_legislation_act&ac=221&lang=en Bank Negara Malaysia. (2015). Life Insurance and Family Takaful Framework. Retrieved from https://www.bnm.gov.my/guidelines/02_insurance_takaful/03_prudential_stds/nt_life%20framework.pdf Bank Negara Malaysia. (2016). Monthly Statistical Bulletin December 2016. Retrieved from http://www.bnm.gov.my/index.php?ch=en_publication&pg=en_msb&ac=238&lang=en&uc=2 BERNAMA. (2011). 1Malaysia Micro Protection Plan developed for Malaysians. Retrieved from http://finance.bernama.com/news.php?id=580013 Beall, J. (2012). Predatory publishers are corrupting open access. Nature, 489, 179. Beall, J. (2015). Scholarly open access: Critical analysis of scholarly open-access publishing. Retrieved from http://scholarlyoa.com Blais, A-R., & Weber, E. U. (2006). A domain-specific risk-taking (DOSPERT) scale for adult populations. Judgment and Decision Making, 1(1), 33-47. Brosdahl, D. J. C., & Almousa, M. (2013). Risk perception and internet shopping: Comparing United States and Saudi Arabian consumers. Journal of Management and Marketing Research, 13(2), 1-17. Burnett, J. J., & Palmer, B. A. (1984). Examining life insurance ownership through demographic and psychographic characteristics. Journal of Risk and Insurance, 51(3), 453-467. Butler, S., Rosman, A., Seleski, S., Garcia, M., Lee, S., Barnes, J., & Schwartz, A. (2012). A medical risk attitude subscale for DOSPERT. Judgment and Decision Making, 7(2), 189-195. Campbell, R. A. (1980). The demand for life insurance: An application of the economics of uncertainty. Journal of Finance, 35(5), 1155-1172. Chen, R., Wong, K. A., & Lee, H. C. (2001). Age, period, and cohort effects on life insurance purchases in the U.S.. Journal of Risk and Insurance, 68(2), 303-327. Chui, A. C. W., & Kwok, C. C. Y. (2008). National culture and life insurance consumption. Journal of International Business Studies, 39(1), 88-101. Contreras, M. (2012). Life insurance – On the brick of change. Asia Insurance Review, 43-46. Ćurak, M., Džaja, I., & Pepur, S. (2013). The effect of social and demographic factors on life insurance demand in Croatia. International Journal of Business and Social Science, 4(9), 65-72. Department of Information. (2015). Population by states and ethnic group, 2015. Retrieved from https://web.archive.org/web/20160212125740/http://pmr.penerangan.gov.my/index.php/info-terkini/19463-unjuran-populasi-penduduk-2015.html Department of Statistics Malaysia. (2017). Current population estimates, Malaysia, 2016-2017. Retrieved from https://www.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=155&bul_id=a1d1UTFZazd5ajJiRWFHNDduOXFFQT09&menu_id=L0pheU43NWJwRWVSZklWdzQ4TlhUUT09 Ernst & Young. (2012). Global consumer insurance survey 2012: Voice of the customer time for insurers to rethink their relationships (global overview). Retrieved from https://thecustomerblog.files.wordpress.com/2012/02/ey-global-report-globalconsumer-insurance-survey-2012.pdf Ferber, R., & Lee, L. C. (1980). Acquisition and accumulation of life insurance in early married life. Journal of Risk and Insurance, 47(4), 713-734. Fischer, S. (1973). A life cycle model of life insurance purchases. International Economic Review, 14(1), 132-152. Gandolfi, A. S., & Miners, L. (1996). Gender-based differences in life insurance ownership. Journal of Risk and Insurance, 63(4), 683-693. Gottlieb, D. (2012). Prospect theory, life insurance, and annuities. The Wharton School Research Paper, 44, 1-43. Gustina, & Abdullah, N. I. (2012). Analysis of demand for family Takaful and life insurance: A comparative study in Malaysia. Journal of Islamic Economic, Banking and Finance, 8(4), 67-86. Gutter, M. S., & Hatcher, C. B. (2008). Racial differences in the demand for life insurance. Journal of Risk and Insurance, 75(3), 677-689. Hair, J. F. Jr., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis: A global perspective (7th ed.). Upper Saddle River, New Jersey: Pearson Education. Hamid, F. S., Rangel, G. J., Taib, F. M., & Thurasamy, R. (2013). The relationship between risk propensity, risk perception and risk-taking behavior in an emerging market. The International Journal of Banking and Finance, 10(1), 134-146. Hanoch, Y., Johnson, J. G., & Wilke, A. (2006). Domain specificity in experimental measures and participant recruitment: An application to risk-taking behavior. Psychological Science, 17(4), 300-304. Hakansson, N. H. (1969). Optimal investment and consumption strategies under risk, on uncertain lifetime, and insurance. International Economic Review, 10(3), 443-466. Harris, T. F., & Yelowitz, A. (2018). Racial disparities in life insurance coverage. Applied Economics, 50(1), 94-107. Hofstede, G. (1983). The cultural relativity of organization practices and theories. Journal of International Business Studies, 14(2), 75-89. Hu, X., & Xie, X. (2012). Validation of the domain-specific risk-taking scale in Chinese college students. Judgment and Decision Making, 7(2), 181-188. Huber, C., & Schlager, T. (2011). To buy or not to buy insurance? The antecedents in the decision-making process and the influence of consumer attitudes and perceptions. Working Papers on Risk Management and Insurance, 90, 136-175. Iacobucci, D. (2012). Mediation analysis and categorical variables: The final frontier. Journal of Consumer Psychology, 22(4), 582-594. Johnson, J. G., Wilke, A., & Weber, E. U. (2004). Beyond a trait view of risk taking: A domain-specific scale measuring risk perceptions, expected benefits, and perceived-risk attitudes in German-speaking populations. Polish Psychological Bulletin, 35(3), 153-163. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292. Keh, H. T., & Sun, J. (2008). The complexities of perceived risk in cross-cultural services marketing. Journal of International Marketing, 16(1), 46-120. Kesharwani, A., & Bisht, S. S. (2012). The impact of trust and perceived risk on internet banking adoption in India: An extension of technology acceptance model. International Journal of Bank Marketing, 30(4), 303-322. Kim, D. J., Ferrin, D. L., & Rao, H. R. (2008). A trust-based consumer decision-making model in electronic commerce: The role of trust, perceived risk, and their antecedents. Decision Support System, 44, 544-564. Korea Life Insurance Association. (2015). Life insurance business in Korea: Annual report 2015/2016. Retrieved from http://www.klia.or.kr/eng/consumer/consumer_01.do Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educational and Psychological Measurement, 30, 607-610. Leary, P., Kane, K. M., & Woods, D. F. (2014). Reversing the decline in life insurance ownership. Journal of Financial Service Professionals, 68(4), 33-41. Lee, S. J., Kwon, S., & Chung, S. Y. (2010). Determinants of household demand for insurance: The case of Korea. The Geneva Papers on Risk and Insurance, 35(1), 82-91. Lengwiler, Y. (2009). The origins of expected utility theory. In W. Hafner & H. Zimmermann (Eds.), Vinzenz Bronzin’s option pricing models: Exposition and appraisal (pp. 535–545). Berlin, Germany: Springer-Verlag. Lewis, F. D. (1989). Dependents and the demand for life insurance. The American Economic Review, 79(3), 452-467. Life Insurance Association of Japan. (2016). Overview of life insurance industry in Japan. Retrieved from http://www.falia.or.jp/assets/pdf/japan_risk/201611Overview_of_Life_Ins.pdf Life Insurance Association of Malaysia. (2014). Consumer Education Programme. Retrieved from https://www.liam.org.my/index.php/library/consumer-educationprogramme Life Insurance Association of Malaysia. (2017). Insurance and Takaful industry launches the code of practice pursuant to Personal Data Protection Act. Retrieved from http://www.liam.org.my/index.php/newsmedia-room/media-releasepress-statements/english/962-insurance-and-takaful-industry-launches-the-code-of-practice-pursuant-to-personal-data-protection-act- Loke, Y. J., & Goh, Y. Y. (2012). Purchase decision of life insurance policies among Malaysians. International Journal of Social Science and Humanity, 2(5), 415-420. Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709-734. Mcknight, D. H., Cummings, L. L., & Chervany, N. L. (1998). Initial trust formation in new organizational relationships. Academy of Management Review, 23(3), 473-490. Mcknight, D. H., Choudhury, V., & Kacmar, C. (2002). The impact of initial consumer trust on the intentions to transact with a website: A trust building model. Journal of Strategic Information System, 11, 297-323. Mitchell, V. W., & Vassos, V. (1997). Perceived risk and risk reduction in holiday purchases: A cross-cultural and gender analysis. Journal of Euro-Marketing, 6(3), 47-79. Monetary Authority of Singapore. (2015). Insurance statistics 2015. Retrieved from http://www.mas.gov.sg/Statistics/Insurance-Statistics/Annual-Statistics/Insurance-Statistics-2015.aspx Money Compass. (2012). NAMLIFA to defend the agency system and create a favorable environment for agents. Retrieved from http://moneycompass.com.my/en/namlifa-to-defend-the-agency-system-and-create-a-favourable-environmentfor-agents/ Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58, 20-38. Office of Commissioner of Insurance. (2015). Annual statistics for long term business 2015. Retrieved from https://www.ia.org.hk/en/infocenter/statistics/market_5_2015.html Omar, O. E. (2007). The retailing of life insurance in Nigeria: An assessment of consumers’ attitudes. Journal of Retail Marketing Management Research, 1(1), 41-47. Pallant, J. (2013). SPSS survival manual: A step by step guide to data analysis using IBM SPSS (5th ed.). New York, NY: McGraw-Hill. Park, S. C., & Lemaire, J. (2011). Culture matters: Long-term orientation and the demand for life insurance. Asia-Pacific Journal of Risk and Insurance, 5(2), 1-21. Performance Management and Delivery Unit (PEMANDU). (2013). EPP 5: Insuring most, if not all of our population. Retrieved from http://etp.pemandu.gov.my/Financial_Services-@-Financial_Services_-_EPP_5-;_Insuring_Most,_If_Not_All,_of_Our_Population.aspx. Performance Management and Delivery Unit. (2013). Economic transformation programme handbook: Chapter 7 - Positioning financial services as the bedrock of the high-income economy. Retrieved from http://etp.pemandu.gov.my/upload/etp_handbook_chapter_7_financial_sevices.pdf Rahman, A. A., Mohamad, S., Ahmad, W. M. W., & Hussin, M. F. (2011). Development of the Islamic insurance business in Malaysia. World Academy of Science, Engineering and Technology, 77, 1374-1377. Rosman, A., Garcia, M., Lee, S., Butler, S., & Schwartz, A. (2013). DOSPERT + M: A survey of medical risk attitudes in the United States. Judgment and Decision Making, 8(4), 470-481. Rousseau, D. M., Sitkin, S. B., Burt, R. S., & Camerer, C. (1998). Not so different after all: A cross-discipline view of trust. Academy of Management Review, 23(3), 393-404. Schwartz, A., Yamagishi, K., Hirahara, N., Onishi, H., Barnes IV, J., Rosman, A., Garcia, M., Lee, S., & Butler, S. (2013). Risk perception and risk attitudes in Tokyo: A report of the first administration of DOSPERT + M in Japan. Judgment and Decision Making, 8(6), 691-699. Schwartz, S. H. (2003). A proposal for measuring value orientations across nations. In Questionnaire Development Report of the European Social Survey (Chap 7) (pp. 259-319). Retrieved from https://www.europeansocialsurvey.org/docs/methodology/core_ess_questionnaire/ESS_core_questionnaire_human_values.pdf Schwartz, S. H. (2012). An overview of the Schwartz theory of basic values. Online Readings in Psychology and Culture, 2(1). Retrieved from https://doi.org/10.9707/2307-0919.116 Schwartz, S. H., & Bilsky, W. (1987). Toward a universal psychological structure of human values. Journal of Personality and Social Psychology, 53(3), 550-562. Schwartz, S. H., & Bilsky, W. (1990). Toward a theory of the universal content and structure of values: Extensions and cross-cultural replications. Journal of Personality and Social Psychology, 58(5), 878-891. Siddiqui, M. H., & Sharma, T. G. (2010). Measuring the customer perceived service quality for life insurance services: An empirical investigation. International Business Research, 3(3), 171-186. Sitkin, S. B., & Weingart, L. R. (1995). Determinants of risky decision-making behavior: A test of the mediating role of risk perceptions and propensity. The Academy of Management Journal, 38(6), 1573-1592. Sherif, M., & Shaairi, N. A. (2013). Determinants of demand on family Takaful in Malaysia. Journal of Islamic Accounting and Business Research, 4(1), 26-50. Swiss Re. (2013). Life insurance: Focusing on the consumer. Retrieved from http://media.swiss re.com/documents/sigma6_2013_en.pdf. Tan, A. K. G., Yen, S. T., Hasan, A. R., & Muhamed, K. (2014). Demand for life insurance in Malaysia: An ethnic comparison using household expenditure survey data. Asia-Pacific Journal of Risk and Insurance, 8(2), 179-204. Tan, H. B., Wong, M. F., & Law, S. H. (2009). The effect of consumer factors and firm efficiency on Malaysian life insurance expenditure. International Journal of Business and Society, 10(1), 59-73. Tang, K. S. (2016). Evolution of life insurance and family Takaful distribution channels. In Financial Stability and Payment Systems Report 2016 (pp. 79-83). Retrieved from https://www.bnm.gov.my/files/publication/fsps/en/2016/cp03_00 1_box.pdf The Star. (2016). We don’t have enough. Retrieved from http://www.thestar.com.my/news/nation/2016/01/03/we-dont-have-enough-most-malaysians-will-struggle-tocope-with-a-health-crisis-while-loved-ones-will/ The Star. (2017). Liberalisation to help boost life insurance penetration rate. Retrieved from https://www.thestar.com.my/business/business-news/2017/05/22/liberalisation-to-help-boost-life-insurance-penetration-rate/The Star. (2017). EIS a win-win scheme for all. Retrieved from https://www.thestar.com.my/news/nation/2017/08/15/eis-a-winwin-scheme-for-all-the-employment-insurance-system-is-designed-to-assist-workers-who-are-la/ Wael. (2007). Introduction to Takaful. Retrieved from http://islamicbanking.info/ introduction-to-takaful/ Wan Aris, Y. B., Sahak, S. Z., & Shaadan, N. (2009). A relook into awareness, perceptions, barriers and future insurance needs: A case study of Takaful and the Malays. Conference of the International Journal of Arts and Sciences, 1(19), 10-21. Weber, E. U., Blais, A-R., & Betz, N. E. (2002). A domain-specific risk-attitude scale: Measuring risk perception and risk behaviors. Journal of Behavioral Decision Making, 15(4), 263-290. Weber, E. U., & Hsee, C. (1998). Cross-cultural differences in risk perception, but crosscultural similarities in attitudes towards perceived risk. Management Science, 44(9), 1205-1217. Weber, E. U., & Milliman, R. A. (1997). Perceived risk attitudes: Relating risk perception to risky choice. Management Science, 43(2), 123-144. Xu, B., Lin, Z., & Shao, B. (2010). Factors affecting consumer behaviors in online buyit- now auctions. Internet Research, 20(5), 509-526. Yaari, M. E. (1965). Uncertain lifetime, life insurance, and the theory of the consumer. The Review of Economic Studies, 32(2), 137-150. Zhu, D. S., Lee, Z. C., O’Neal, G. S., & Chen, Y. H. (2011). Mr. risk! Please trust me: Trust antecedents that increase online consumer purchase intention. Journal of Internet Banking and Commerce, 16(3), 1-23.

The determinants of life insurance ownership : the mediating effect of risk perception

Similar Items