The life insurance market in Malaysia still remains widely untapped as
compared to other countries that have much higher market penetration rates.
Therefore this study aims to examine the relationship of life insurance
ownership with demographic and psychographic factors, and to identify which
of them have a more important relationship with life insurance ownership. A
preliminary field work has been carried out in early February to mid-March
2015 using a non-probability convenience sampling technique around Alor
Setar, Kedah in Malaysia. A total of 108 respondents participated in this study.
Binary logistic regression has been used for data analysis. The major findings
show that demographic factors can better explain life insurance ownership
among the respondents in Alor Setar relative to psychographic factors. Two
demographic factors, namely ethnicity and income, are found to be the
predominant factors of life insurance ownership. Life insurance policyholders in
Alor Setar tend to be Chinese and those at higher income level. Meanwhile, the
psychographic factor of risk attitudes only has a weak negative relationship with
life insurance ownership. Risk attitudes are only found to have a significant
relationship with life insurance ownership when demographic factors are
excluded. Non-policyholders in Alor Setar tend to be individuals who are very
likely to engage in risky behaviours or activities. They are risk takers, unlike
risk adverse individuals who are more likely to own life insurance for assured
protection against personal risks of premature death.
