Wireko income and the demand for life insurance

Wireko Daniel (2015) analyzed the determinants of the
demand for life insurance products in Ghana from consumers point of view and
investigated the determinants by using one Logit regression model was estimated
to help investigate the determinants. The Statistical Package for Social
Sciences (SPSS) 16.0 and STATA 5.0 version was applied for the analysis of the
Logit regression model specified. His study’s Results illustrated that 61.33%
of the respondents give respond to Endowment policy and 26.33 % by Term
insurance policy and 12.33% by Whole life policy Consistent. He concluded that
there is a positive association between level of income and the demand for life
insurance products and negative relationship between the market interest rate
and level of savings and the demand for life insurance products. He found that
there is no effect of Price of insurance (level of premium) on life insurance
consumption and there is indirect relationship between Inflation and life
insurance consumption. Education, employment status and the age of consumers
had direct effect on life insurance consumption. But there is statistically
insignificant positive relationship between family size and demand. Thus, he is
concluded with that life insurance demand can be analyzed better when the
economic and socio-demographic factors are taken combined. It was suggested
that additional examinations should be made on how portfolio diversification and
information asymmetry influences profit levels on the insurance market. The
other researchers are recommended that Other aspects of life insurance that
must also be taken in consideration like: Market forces, hindrances and
challenges confronting the growth of life insurance business in Ghana. It was
suggested to examine the condition of national policy and regulation on life
insurance activities in Ghana.

Ondrusuka (2016) examined personal, demographic and
economic determinants of the life insurance consumption in Slovak Republic in
2014. He used the classification tree method to identify the key determinants
of life insurance demand in small economy of Slovak Republic. the demographic
indicators which were examined by him includes age, education and the economic
indicators includes savings and to determine the life insurance demand by the
analysis of sample selected 870 respondents of the questionnaire survey. He
found that age, education and savings and employment status are the most
important determinants to determine the life insurance consumption. He
suggested that these results may assists the insurance companies to understand
their consumers in better way that who buy and who do not buy private insurance
which will help the policy makers to targets the state programs and others schemes
of social security. Therefore, the researchers should examine other factors
which helps to improve their acquisition and segmentation techniques.

Ondrusuka (2016) examined personal, demographic and
economic determinants of the life insurance consumption in Slovak Republic in
2014. He used the classification tree method to identify the key determinants
of life insurance demand in small economy of Slovak Republic. the demographic
indicators which were examined by him includes age, education and the economic
indicators includes savings and to determine the life insurance demand by the
analysis of sample selected 870 respondents of the questionnaire survey. He
found that age, education and savings and employment status are the most
important determinants to determine the life insurance consumption. He
suggested that these results may assists the insurance companies to understand
their consumers in better way that who buy and who do not buy private insurance
which will help the policy makers to targets the state programs and others
schemes of social security. Therefore, the researchers should examine other
factors which helps to improve their acquisition and segmentation techniques.

Ghimire (2017) explored the
reason of unwillingness to purchase life insurance policies by examining the perception of uninsured person towards the
Life Insurance Policy in Nepal during the time-period 2004-2014. He made the differences on decisions of respondents
and their level of education, income, expenditure, and fixed asset by using
purposive sampling method. He used A structured questionnaire to get the
observations of 300 uninsured respondents. He used Mode and Mann Whitney U test
to examine the perception and difference on perception of respondents respectively.
He found that both financial and non-financial problems influenced the
respondents. That reasons were the dependency of the relatives during bad
time-period, low bonus rate of life insurance, and sufficient property. Furthermore,
the non-financial reasons he found were mistrusting psychology over life insurance,
perceiving the low-quality services of company, lack of convincing capacity of
agents, and complex claims settlement process. The results showed that that the
perceptions of respondents were not influenced by level of education and
expenditure but assets and income had more effect on the perception of uninsured
significantly. It was recommended that the life insurance companies should
increase the social faith over insurance by awareness campaign, the investment
linked type product introduction, the service quality improvement and the
financial performance of the companies increment. Furthermore, Government must
ought to give financial incentives to rise the demand of insurance product.

2.2. SUMMARY OF LITERATURE REVIEWS:

By studying the different literatures, it
has been noticed that different researchers take different variables in the
model in order to explain the variety in demand for life insurance, which can
be summarized that GDP per capita, GDS (gross domestic savings) per capita,
financial depth, urbanization, dependency ratio, adult literacy, population,
life expectancy at birth, crude death rate, inflation, real interest rate and
insurance price are the main determinants of the demand for life insurance.
According to the previous findings, life insurance consumption and income are
significant positive related; Among the macroeconomic factors, income is
considered as the most important factor that leads to more affordability and
ultimately higher demand for insurance products (Browne & Kim, 1993; Hammond,
Houston, & Melander, 1967)., and financial development, gross domestic
savings are also positively related with life insurance demand, and negative to
inflation. Real interest rate was shown to be insignificant in a cross-country
analysis. According to Beck and Webb (2002) results, life expectancy and young and
old dependency ratio were significant, together with adult literacy rate and
rate of urbanization.

2.3. CONTRIBUTION OF STUDY:

By reviewing the literatures
on demand for life insurance it has been observed that many studies have been
done on international level. Though these studies are significant contribution
to the literature on demand for life insurance, but for that there have been
huge differences in cultural, economic and legal environments between developed
and developing countries therefore the applications of their results to other
countries may not be possible like Pakistan. 
This research study will expect to fill the gap in literature by
identification that factors which determines life insurance demand and will
remove the hurdles in life insurance demand in Pakistan. An examination of
factors that motivate life insurance purchaser will give new ideas for
developing, marketing, and the formulation of policy related to insurance
products and insurance business. In course of new initiatives, numerous
benefits of insurance are anticipated to get in touch with a large part of the
population.

 

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