The Determinants of Life Insurance Ownership

Aryanti Sariartha Sianipar, Arif Qaedi Hutagalung

Abstract


Life insurance ownership has been known as one of alternatives to mitigate the financial risk of a household. Several ethnicities in Indonesia are exposed to financial risk in terms of premature death of family members because there exists cultural traits expenditures. This paper examines the decision to own life insurance among Bataknese in Medan. The determinants of life insurance ownership observed in this study include socioeconomic and demographic factors. Data was analysed using Logit regression of 185 questionnaires after adjustments from 200 responses. The results show that the Batak ethnic in Medan owned personal life insurance because it was driven by the number of credit card limits, age, number of social gathering clan, education, residence ownership status, and bequest motives. Meanwhile, Saur matua life insurance (cultural traits) ownership is driven by factors in the order of the first child in the family, the number of brothers, life expectancy, and the condition of receiving inheritance from parents. Bataknese own life insurance affected by socioeconomic and demographic factors. This research can provide opportunities for the life insurance industry if it wants to add new features of life insurance products that are specific to ethnic groups with similar cultural heritage patterns.

DOI: https://doi.org/10.26905/jkdp.v25i1.5112



Keywords


Bequest; Culture; Customs; Financial Plan; Life Insurance

Full Text:

PDF

References


Akhter, W., & Khan, S. U. (2017). Determinants of Takāful and conventional insurance demand: A regional analysis, Cogent Economics and Finance, 5, 129-150. http://dx.doi.org/10.1080/23322039.2017.1291150.

Annamalah, S. (2013). Profiling and Purchasing Decision of Life Insurance Policies among Married Couples in Malaysia. World Applied Sciences Journal, 23(3), 296-304.

Beenstock, M., & Dickinson, G. (1986). The determination of life premiums : An international cross-section analysis 1970-1981. Insurance: Mathematics and Economics. 5, 261–270. https://doi.org/10.1016/0167-6687(86)90020-X.

Bernheim, B. D. (1991). How Strong Are Bequest Motives ? Evidence Based on Estimates of the Demand for Life Insurance and Annuities. Journal of Political Economy, 99(5), 899–927. http://dx.doi.org/10.1086/261783.

Bernheim, B. D., Forni, L., Jagadeesh, G., & Kotlikoff, L. J. (2003). The Mismatch between Life Insurance Holdings and Financial Vulnerabilities: Evidence from the Health and Retirement Study. American Economic Review, 93(1), 354-365. https://doi.org/10.1257/000282803321455340.

Çelik, S & Kayali, M.M. (2009). Determinants of demand for life insurance in European countries. Problems and Perspectives in Management, 7(3), 32-37.

Curak, M., Dzaja, 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.

Dash, G. (2018). Determinants of Life Insurance Demand: Evidences From India. Asia Pacific Journal of Advanced Business and Social Studies, 4(2), 86-99.

Dragos, S., L. (2014). Life and non-life insurance demand: the different effects of influence factors in emerging countries from Europe and Asia. Economic Research- Ekonomska Istraživanja, 27(1), 169-180. https://doi.org/10.1080/1331677X.2014.952112.

Gutter, M. S., Hatcher, C. B., & Hatcher, C. B. (2020). Racial Differences in the Demand for Life Insurance. The Journal of Risk and Insurance, 75(3), 677–689. https://doi.org/10.1111/j.1539-6975.2008.00279.x.

Hartley, D., Paulson, A., & Powers, K. (2017). What Explains the Decline in Life Insurance Ownership?. Economic Perspectives, (8), 1-20.

Hasugian, R. M. (2017). Upacara Kematian Saur matua Batak Toba: Analisis Tradisi Lisan. LINGUA, 14(2), 225–242.

Hau, A. (2000). Liquidity, Estate Liquidation, Charitable Motives, and Life Insurance Demand by Retired Singles. The Journal of Risk and Insurance, 67(1), 123–141. https://doi.org/10.2307/253680.

Kakar, P. (2010). The Determinants of Demand for Life Insurance in an Emerging Economy — India. The Journal of Applied Economic Research 4 (1), 49–77. https://doi.org/10.1177/097380100900400103.

Katrina, E. (2017). Saur matua Etnik Batak Toba : Kajian Wacana Kritis. Skripsi. Program Studi Sastra Batak Fakultas Ilmu Budaya Universitas Sumatera Utara.

Kim, K. T., & Hanna, S. D. (2019). The decrease in life insurance ownership : Implications for financial planning. Financial Services Review, (July).

Kjosevski, J. (2012). The Determinants of Life Insurance Demand in Central and Southeastern Europe. International Journal of Economics and Finance, 4(3), 237–247. https://doi.org/10.5539/ijef.v4n3p237.

Lee, S. J., Kwon, S. I., & Chung, S.Y. (2010). Determinants of household demand for insurance: The case of Korea. The Geneva Papers, 35(S1), 82-91.

Lewis, E. D. (1989). Dependents and the Demand for Life Insurance. American Economic Review, 79(3), 452–467.

Liebenberg, A. P., Carson, J. M., & Dumm, R. E. (2012). A Dynamic Analysis of the Demand for Life Insurance. The Journal of Risk and Insurance, 79(3), 619–644. https://doi.org/10.1111/j.1539-6975.2011.01454.x.

Luciano, E., Outreville, J. F., & Rossi, M. (2016). Life Insurance Ownership by Italian Households : A Gender-Based Differences Analysis. The Geneva Papers on Risk and Insurance Issues and Practice, (December 2012). https://doi.org/10.1057/gpp.2016.7.

Moshirian, F., Nguyen, P., & Wee, T. (2016). The Demand Countries for Life Insurance in OECD. The Journal of Risk and Insurance, 74(3), 637–652.

Neuman, W. L. (2011). Social Research Methods Qaulitative and Quantitative Approaches. Published by Pearson.

Outreville, J. F. (2018). Culture and Life Insurance, is It an Issue?. Journal of Insurance Issues, 41(2), 168–192. https://www.jstor.org/stable/26505753.

Peters, D., & McKay, D. (2014). Life insurance: Ownership and investment considerations. Canadian Journal of Plastic Surgery, 22(1), 54-55.

Pitoyo, A. J., & Triwahyudi, H. (2018). Dinamika Perkembangan Etnis di Indonesia dalam Konteks Persatuan Negara. Populasi, 25(1), 64. https://doi.org/10.22146/jp.32416.

Sliwinski, A., Michalski, T., & Roszkiewicz, M. (2013). Demand for Life Insurance — An Empirical Analysis in the Case of Poland. The Geneva Papers, 38, 62–87. https://doi.org/10.1057/gpp.2012.21.

Sen, S., & Madheswaran, S. (2013). Regional determinants of life insurance consumption: Evidence from selected Asian economies. Asian-Pacific Economic Literature. 27(2), 86-103. https://doi.org/10.1111/apel.12024.

Tan, A., Yen, S., 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.

Timoria, L. (2019). Kesiapan Keluarga Dalam Upacara Adat Kematian Saurmatua Pada Suku Batak Toba Desa Muliorejo Kabupaten Deli Serdang Kota Medan Sumatera Utara. Skripsi. Program Studi Pendidikan Sejarah Fakultas Keguruan dan Ilmu Pendidikan Universitas Lampung.

Yaari, M. (1965). Uncertain Lifetime, Life Insurance, and the Theory of the Consumer. The Review of Economic Studies, 32(2), 137-150. https://doi.org/10.2307/2296058.

Zakaria, Z., Marina, N., Fakrul, N., & Nik, H. (2016). The Intention to Purchase Life Insurance : A Case Study of Staff in Public Universities. Procedia Economics and Finance, 37(16), 358–365. https://doi.org/10.1016/S2212-5671(16)30137-X.




DOI: https://doi.org/10.26905/jkdp.v25i1.5112

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 813-3180-1534
Email: jkp@unmer.ac.id

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0