Understanding Consumer Perceptions and Behavioral Indicators in the Life Insurance Market

Abstract

The growing complexity of life insurance markets requires a deep understanding of the many factors that shape people's choices about buying life insurance. This investigation examines the determinants that affect individuals' choices to secure life insurance coverage, utilizing binary, ordinal logistic and an unordered multinomial regression to scrutinize demographic and socioeconomic variables. The model's statistical significance is validated by a Chi-Squared statistic, -2 Log Likelihood and the explanatory power is measured using Cox & Snell R Square, Nagelkerke R Square and McFadden. The research is grounded in a comprehensive survey of 843 respondents, examining key factors like age, gender, education, income, size, savings, opinion, and status, assessing how they impact life insurance licensing and Willingness to Acquire Insurance. The findings reveal limited predictors for the possession of a life insurance license, with significant positive correlations observed for Income and Information, while demographic factors such as Age, Gender, Status, and Size showed no significant effects. The ordinal logistic regression model identified Size as a significant predictor of willingness to acquire insurance, although Age and Income displayed marginal positive influences. Notably, negative opinions significantly impacted willingness, while Savings correlated negatively, yet without statistical significance. These findings provide valuable insights for policymakers and industry stakeholders aiming to enhance life insurance penetration by addressing motivational and barrier factors encountered by potential insured individuals. The study highlights the limitations of consumer perception research done only in one country because its findings are specific to Albania. Expanding the sample to include a wider geographic range could also provide deeper insights into the motivations and barriers faced by potential policyholders.