THE INFLUENCE OF FINANCIAL LITERACY, PRODUCT INNOVATION, DIGITAL PROMOTION, AND INVESTOR RISK ATTITUDE ON LIFE INSURANCE DECISIONS

Abstract

This study aims to analyze the influence of financial literacy, product innovation, digital promotion, and investor risk attitudes on life insurance purchasing decisions. This study is motivated by inconsistencies in previous study findings related to the factors that affect individuals’ decisions to purchase life insurance, particularly those involving financial literacy, product innovation, digital promotion, and risk attitude. In addition, no prior study has comprehensively integrated these four variables into a single model that aligns with the current developments in digitalization and the dynamics of the insurance industry. The research employs a quantitative approach with a purposive sampling technique, in which respondents are selected based on specific criteria, namely, individuals aged 25–55 years who have held a life insurance policy for more than one year. A total of 250 respondents participated in the survey, and the data were analyzed using covariance-based Structural Equation Modeling (SEM) to examine both direct and indirect effects among the variables. The findings indicate that product innovation and digital promotion significantly affect life insurance purchasing decisions, while financial literacy exerts a significant indirect effect through investor risk attitudes. Investor risk attitude serves as a strong mediator that bridges the influence of financial literacy, product innovation, and digital promotion on life insurance decisions. Overall, the tested SEM model demonstrates a good fit and suggests that life insurance decisions are shaped not only by knowledge-related factors but also by risk perception and the quality of product innovation offered by the insurance company.