Affordable Life Insurance Spending Among B40 Income Group in Malaysia: A Case Study

International Journal of Research and Scientific Innovation (IJRSI) | Volume VIII, Issue X, October 2021 | ISSN 2321–2705

Affordable Life Insurance Spending Among B40 Income Group in Malaysia: A Case Study

Noraini Manan¹, Nurhasniza Idham Abu Hasan², Nur Faezah Jamal^3
1Center for Actuarial Sciences Studies, Faculty of Computer & Mathematical Sciences, Universiti Teknologi MARA, 40450 Shah Alam, Malaysia
^2.3Department of Statistics, Faculty of Computer & Mathematical Sciences, Universiti Teknologi MARA, Perak Branch, Tapah Campus, 35400 Tapah Road, Perak, Malaysia

Abstract: Life insurance is critical in providing coverage and protection against the risk of a person’s death and total permanent disability. However, only a small number of Malaysians own life insurance and a few of them are from the B40 group. This paper examines the consumption of Life Insurance and Takaful policies for the B40 group in Malaysia. The secondary data were obtained from 15 Takaful operators in Malaysia from the year 2014-2019. There are six factors namely, (1) Ethnicity, (2) Monthly Income, (3) Gender, (4) Age, (5) Occupation, and (6) Highest level of education that use to predict the affordance amount of insurance spending among B40 group in Malaysia. By using Multiple Linear Regression (MLR) indicates that ethnicity, monthly income, and education level were statistically significant to predict the affordance amount of insurance spending among B40 group in Malaysia. Based on their monthly income, the average affordable amounts spending among B40 group were RM 43.48±84.38. Therefore, in promoting financial services that are accessible to all Malaysian especially B4 group, it was suggested to provide an affordable amount of premium for B40 group.

Keywords: Affordable, B40 group, Life Insurance, Low-income group, Multiple Linear Regression.

I. INTRODUCTION

In promoting financial services such as Life Insurance and Takaful that are accessible to all Malaysian from all levels of income, Bank Negara Malaysia had come out with the idea of providing financial protection to the nation low-income earners or bottom 40% group (B40 group). The financial protection is aimed to ease the burden of the B40 group in the event whereby there are financial loss happened. Recently, LohGuat Lan, President of the Life Insurance Association of Malaysia (LIAM), stated that life insurance should be purchased by everyone and should not be viewed as an additional financial burden [1]. However, the existence of these financial insurance services does not seem to catch the eyes of the B40 group although the price of the product is lower compared to the usual Life Insurance and Takaful product offered in the market. Question has arisen as to why the B40 groups have not yet purchased the Life Insurance and Takaful product.

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