Demand for Life Insurance in Malaysia: An Ethnic Comparison Using Household Expenditure Survey Data

Tan Andrew K. G. (), Yen Steven T. (), Hasan Abdul Rahman () and Muhamed Kamarudin ()
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Tan Andrew K. G.: School of Social Sciences, Universiti Sains Malaysia, 11800 Penang, Malaysia
Yen Steven T.: STY Health Econometrics, Knoxville, TN 37931, USA
Hasan Abdul Rahman: Department of Statistics Malaysia, 62514 Putrajaya, Malaysia
Muhamed Kamarudin: Department of Statistics Malaysia, 62514 Putrajaya, Malaysia

Asia-Pacific Journal of Risk and Insurance, 2014, vol. 8, issue 2, 179-204

Abstract: This study examines the socio-demographic determinants of household expenditures on life insurance in Malaysia. Cragg’s two-part regression model is applied to data of 20,313 sample households from the 2009–2010 Malaysian Household Expenditure Survey to examine the determinants of purchase decisions and expenditure level for life insurance. Results of marginal effects, segmented by ethnicity, suggest that while socio-demographic factors are important determinants of life insurance demand, the effects vary across ethnic groups in Malaysia. For instance, wealth and education levels are associated with purchase likelihoods and amount of life insurance premiums purchased across ethnic groups. However, household size, regional location, urbanicity, and occupation type are associated with life insurance demand within certain ethnic groups only. Based on these results, several observations are noted vis-à-vis the life insurance market in Malaysia.

Keywords: ethnicity; expenditures; Malaysia; life insurance; two-part model (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1515/apjri-2013-0007

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