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Effect of Insurance Premium Affordability on Life Insurance Uptake

Abstract

Life insurance provides financial protection against risks associated with death and supports the financial security of individuals and their dependants. However, the level of life insurance uptake may be influenced by the affordability of premiums, particularly among individuals with limited or irregular income. Premium affordability determines the extent to which potential policyholders can meet the financial requirements of obtaining and maintaining life insurance coverage. This study examines the effect of insurance premium affordability on life insurance uptake. The study will assess how the cost of life insurance premiums influences individuals’ decisions to purchase and maintain life insurance policies. It will focus on the relationship between perceived premium affordability and the willingness of individuals to obtain life insurance protection. The study will consider factors such as premium levels, household income, payment frequency, policy benefits, policy duration, premium payment flexibility, disposable income, and perceived value of insurance coverage. These factors will be examined to determine how the affordability of premiums influences policy purchase decisions, coverage levels, and continued participation in life insurance schemes. A quantitative research approach will be adopted for the study. Primary data will be collected from existing and potential life insurance policyholders using structured questionnaires. The collected data will be analysed using descriptive statistics, correlation analysis, and regression analysis to determine the relationship between premium affordability and life insurance uptake. Relevant demographic and insurance characteristics will also be considered in analysing the responses. The study is expected to reveal that greater premium affordability may increase life insurance uptake. Individuals who perceive premiums as affordable relative to their income and expected benefits may be more willing to purchase and maintain life insurance policies. The findings may also indicate that high premium requirements, inflexible payment arrangements, and limited disposable income can reduce the ability and willingness of individuals to obtain life insurance coverage. The study will be useful to life insurance companies, actuaries, financial institutions, regulators, policymakers, and consumers. It may provide useful information for developing affordable premium structures, flexible payment arrangements, suitable benefit packages, and products that address the financial circumstances of different groups of potential policyholders. The findings may also contribute to efforts aimed at expanding life insurance participation. The study concludes that premium affordability is an important consideration in life insurance uptake because the cost of insurance can influence individuals’ ability and willingness to obtain coverage. It is therefore recommended that life insurance providers develop affordable products, provide flexible premium payment options, review premium structures regularly, and align benefit levels with the financial capacity of potential policyholders.

Keywords: Insurance premium affordability, life insurance uptake, life insurance demand, premium levels, household income, insurance participation, policy purchase, premium payment flexibility, life insurance coverage, disposable income, policy benefits, insurance pricing, financial capacity, insurance accessibility, life insurance market.