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3.4.1 The Relationship between Demographic Factors and Life Insurance Ownership

The hypotheses regarding the relationship between demographic factors (i.e. income, age, gender, marital status, education, number of dependents and ethnicity) and life insurance ownership are constructed based on the findings of related past studies.

3.4.1.1 Income

Income has been found to have a significant positive relationship with life insurance ownership in many past studies (Gandolfi and Miners, 1996; Gutter and Hatcher, 2008; Tan, Wong and Law, 2009; Lee, Kwon and Chung, 2010; Gustina and Abdullah, 2012; Loke and Goh, 2012; Annamalah, 2013; Sherif and Shaairi, 2013; Tan et al., 2014; Harris and Yelowitz, 2018). Individuals with a higher level of income have a greater purchasing power as they have more disposable income to purchase life insurance. Their household consumptions also increase with the increase in income level and this provokes the need

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for life insurance as a protection tool to mitigate financial risk due to the premature death of breadwinner. Therefore, income is hypothesized to have a positive relationship with life insurance ownership:

H1: There is a positive relationship between income and life insurance ownership.

3.4.1.2 Age

The findings of past studies show that the relationship between age and life insurance ownership is inconclusive. The need for life insurance is triggered by different life events (e.g. getting new jobs, newly married, having young family or preparing for retirement) and different experiences the individual has gone through over his/her lifetime. The likelihood to own life insurance varies according to the individuals’ age. Life insurance ownership is possibly considered not necessary for the young individuals who have just entered workforce and with no dependents. During the middle age, the individuals generally have more stable income streams and they would feel that life insurance is needed to provide income protection for their dependents. When the individuals approach retirement age, they usually live off their accumulated wealth and they are less likely to purchase life insurance. There are several other possible reasons for a lower likelihood to purchase life insurance among older individuals, such as life insurance is expensive for them (because of high probability of death), their declining human capital (i.e. labor income) and their children have become independent. Therefore, the hypothesis for age is constructed as follows:

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3.4.1.3 Gender

Based on the findings of past studies, gender is found to be a significant factor for life insurance ownership (Gandolfi and Miners, 1996; Chen, Wong and Lee, 2001; Harris and Yelowitz, 2018). Males and females show various distinct differences. Males generally assume the role of breadwinner in the family. Meanwhile, the social roles of females have changed nowadays when they could easily obtain education and secure a job. Therefore, the contribution of females in the family is expected to increase. As a result, life insurance ownership could be determined by the different roles undertaken by males and females in the family. The hypothesis for gender is constructed as follows:

H3: There is a relationship between gender and life insurance ownership.

3.4.1.4 Marital Status

The relationship between marital status and life insurance ownership is found to be inconclusive. Individuals generally have a greater bequest motive when they are married. Therefore, married individuals would consider having life insurance as a protection to mitigate financial loss which would be suffered by their dependents in the event of the premature death of breadwinner. On the other hand, single individuals could have purchased life insurance if they have other family members or loved ones who would be affected financially in the event of their premature death. Therefore, the hypothesis for marital status is constructed as follows:

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3.4.1.5 Education

The findings of most past studies show that there is a significant positive relationship between education and life insurance ownership (Gandolfi and Miners, 1996; Gutter and Hatcher, 2008; Lee, Kwon and Chung, 2010; Gustina and Abdullah, 2012; Annamalah, 2013; Ćurak, Džaja and Pepur, 2013; Sherif and Shaairi, 2013; Tan et al., 2014; Harris and Yelowitz, 2018). The level of individuals’ financial literacy is presumed to vary according to their education level. A more highly educated individual is expected to have a better understanding about the roles of life insurance as a personal risk management tool to alleviate his/her financial risk due to uncertain lifetime. Therefore, education is hypothesized to have a positive relationship with life insurance ownership:

H5: There is a positive relationship between education and life insurance ownership.

3.4.1.6 Number of Dependents

The findings of several past studies show that there is a significant positive relationship between number of dependents and life insurance ownership (Gandolfi and Miners, 1996; Arun, Bendig and Arun, 2012; Sherif and Shaairi, 2013; Harris and Yelowitz, 2018). The individual’s desire to leave a bequest is stronger when he/she has a bigger number of dependents. A bigger number of dependents indicates the need for life insurance for protection surges because the untimely death of breadwinner could inflict a huge financial loss for the dependents. Therefore, number of dependents is hypothesized to have a positive relationship with life insurance ownership:

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H6: There is a positive relationship between number of dependents and life insurance