My Research Proposal

Exploring the Demographic, Economic, Exploring the Demographic, Economic, Financial and Psychographic Factors that Financial and Psychographic Factors that Influenced the Demand for Life Insurance Influenced the Demand for Life Insurance in Grepalife Bancassurancein Grepalife Bancassurance

By Mariane Ever A. Natalio

Overview of Research Proposal

Background of the Background of the StudyStudy

Research ProblemResearch Problem

Objectives of the StudyObjectives of the Study

Significance of the StudySignificance of the Study

Chapter 1Chapter 1


Chapter 1Chapter 1

Theoretical FrameworkTheoretical Framework

Conceptual FrameworkConceptual Framework

Scope and LimitationsScope and Limitations

HypothesesHypotheses


Chapter 2Chapter 2

Review of Related LiteratureReview of Related Literature


Chapter 3Chapter 3

Research DesignResearch Design

Research ParticipantsResearch Participants

Research InstrumentsResearch Instruments

Data and VariablesData and Variables

Background of the Study

Life InsuranceA contract between the policy owner and the insurer, A contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured sum of money upon the occurrence of the insured individual's or individuals' death or other event.individual's or individuals' death or other event.

Permanent Life Insurance-Provides both protection and savings (cash-values)

Term Life Insurance- Provides “protection” alone

- Does not have savings element- Less expensive policy


The purchase of life insurance is one of the The purchase of life insurance is one of the most important purchasing decisions for most important purchasing decisions for individuals and families.individuals and families.Consumers consider the purchase of life Consumers consider the purchase of life insurance to be a complex process and 8 out insurance to be a complex process and 8 out 10 find it difficult to decide how much and 10 find it difficult to decide how much and what type of life insurance to buy (LIMRA* what type of life insurance to buy (LIMRA* 2006) 2006)

*LIMRA - Life Insurance Marketing and Research Association LIMRA - Life Insurance Marketing and Research Association


March 1829 - Insurance was first introduced in March 1829 - Insurance was first introduced in the Philippines but was limited to non-life the Philippines but was limited to non-life insuranceinsurance1898 - life insurance was introduced by Sun 1898 - life insurance was introduced by Sun Life Assurance of CanadaLife Assurance of Canada

Brief History of InsuranceBrief History of Insurance


1910 - Insular Life Assurance Company, the 1910 - Insular Life Assurance Company, the first domestic life insurance company first domestic life insurance company 1954 – Grepalife Financial, Inc. was 1954 – Grepalife Financial, Inc. was establishedestablished



2000 - BPI became the first bancassurance 2000 - BPI became the first bancassurance firm in the Philippines, after it acquired the firm in the Philippines, after it acquired the insurance companies of the Ayala Group.insurance companies of the Ayala Group.2007 - Grepalife engaged in bancassurance 2007 - Grepalife engaged in bancassurance with RCBC and RCBC Savings Bankwith RCBC and RCBC Savings Bank



With more than 100 years of life insurance With more than 100 years of life insurance existence in the Philippines, its penetration rate existence in the Philippines, its penetration rate remains low at 13.11% to 13.92% and that 90% remains low at 13.11% to 13.92% and that 90% of Filipinos have little or nothing to leave their of Filipinos have little or nothing to leave their families when they pass away (Insurance families when they pass away (Insurance Commission 2008)Commission 2008)

Research Problem

This issue in the low penetration rate of life This issue in the low penetration rate of life insurance creates interest in examination of the insurance creates interest in examination of the consumer demand for life insurance. consumer demand for life insurance. The key attributes for any business to succeed The key attributes for any business to succeed depends on the customers satisfaction towardsdepends on the customers satisfaction towardsthe company. This study aims to understand the company. This study aims to understand consumer purchasing behavior in order to help consumer purchasing behavior in order to help them buy suitable policies. them buy suitable policies.

Research Problem

What are the characteristics of households who have What are the characteristics of households who have purchased either permanent or term life insurance?purchased either permanent or term life insurance?

What is the nature of the relationship between either the What is the nature of the relationship between either the type of life insurance or the amount of life insurance type of life insurance or the amount of life insurance purchased by the consumer and the consumers purchased by the consumer and the consumers demographic, economic, and psychographic characteristics? demographic, economic, and psychographic characteristics?

What is the nature of the relationship between life insurance What is the nature of the relationship between life insurance and other assets in households’ financial portfolios? and other assets in households’ financial portfolios?

The following questions will be answered :The following questions will be answered :

Research Objectives

Specifically, it aims to:Specifically, it aims to:

The major objective of this study is to examine The major objective of this study is to examine the factors that influence the consumer’s demand the factors that influence the consumer’s demand for life insurance. for life insurance.

describe the characteristics of households describe the characteristics of households who have purchased either permanent or who have purchased either permanent or term life insurance;term life insurance;

Research Objectives

determine significant relationship between either determine significant relationship between either the type of life insurance or the amount of life the type of life insurance or the amount of life insurance purchased by the household and the insurance purchased by the household and the following:following:

— households demographic characteristics;households demographic characteristics;— economic and financial characteristics;economic and financial characteristics;— psychographic characteristicspsychographic characteristics

evaluate the relationship between life insurance and evaluate the relationship between life insurance and other assets in household’s financial portfoliosother assets in household’s financial portfolios

Significance of the Study

The study aims to benefit the following:The study aims to benefit the following:

Grepalife - in identifying the factors Grepalife - in identifying the factors influencing its market to buy life insurance influencing its market to buy life insurance and to formulate strategies to meet their and to formulate strategies to meet their demandsdemands

Grepalife’s Product Management Team – in Grepalife’s Product Management Team – in creating products and services that are creating products and services that are appropriate and responsive to the market’s appropriate and responsive to the market’s changing needschanging needs

Significance of the Study

The study aims to benefit the following:The study aims to benefit the following:USTUST Graduate School students – to encourage Graduate School students – to encourage further studies that will explore factors that further studies that will explore factors that influence the demand for life insurance so that influence the demand for life insurance so that insurance penetration rate in the country will insurance penetration rate in the country will improveimprove

Other life insurance companies – to enable them to Other life insurance companies – to enable them to better understand consumer behavior towards life better understand consumer behavior towards life insurance and thus be better equipped to motivate insurance and thus be better equipped to motivate consumers to purchase needed and appropriate consumers to purchase needed and appropriate products products

Scope and Limitations

The study will measure the factors The study will measure the factors (demographic, economic and financial, and (demographic, economic and financial, and psychographic) influencing the demand for life psychographic) influencing the demand for life insurance products sold through Grepalife insurance products sold through Grepalife Bancassurance.Bancassurance.


The chosen respondents are clients of RCBC The chosen respondents are clients of RCBC and RCBC Savings from 2007 to 2010. These and RCBC Savings from 2007 to 2010. These include those who have or have not bought at include those who have or have not bought at least one or combination of term and cash-least one or combination of term and cash-value policies.value policies.


The study will not examine different types of cash The study will not examine different types of cash value life insurance, such as universal life value life insurance, such as universal life insurance, variable life insurance, and variable insurance, variable life insurance, and variable universal life insurance. universal life insurance. Respondents will be asked to provide information Respondents will be asked to provide information on their family’s life insurance holding, not the on their family’s life insurance holding, not the separate information on life insurance owned by separate information on life insurance owned by the head, spouse, and other members. the head, spouse, and other members.

Hypothesis

There is no significant relationship between owning a life There is no significant relationship between owning a life insurance or the amount life insurance purchased by insurance or the amount life insurance purchased by households with the following:households with the following:

•Demographic factorsDemographic factors•Economic and financial factorsEconomic and financial factors•Psychographic characteristicsPsychographic characteristics

There is no significant relationship with the household’s other There is no significant relationship with the household’s other assets in their financial portfolios and their decision to buy assets in their financial portfolios and their decision to buy term and permanent life insurance.term and permanent life insurance.

The following null hypotheses will be tested:The following null hypotheses will be tested:

Theoretical Framework

Expected Utility Theory (EUT) Expected Utility Theory (EUT) (Bernoulli, 1738 as cited by Nyman, 2001) (Bernoulli, 1738 as cited by Nyman, 2001)

EUT states that when faced with some type of uncertain EUT states that when faced with some type of uncertain choice, consumers make decisions based on two factors - choice, consumers make decisions based on two factors -

the utility of the outcomes and their respective the utility of the outcomes and their respective probability. probability.

A decision maker chooses actions or strategies that A decision maker chooses actions or strategies that maximize his or her expected utility. However, utilities maximize his or her expected utility. However, utilities

are also determined by the decision marker’s are also determined by the decision marker’s preferences. Individuals have different preferences preferences. Individuals have different preferences

toward different risk levels. toward different risk levels.

Theoretical Framework

Permanent and Life Cycle Income Hypothesis (PIH)Permanent and Life Cycle Income Hypothesis (PIH) (Friedman 1957 as cited by Li 2008) (Friedman 1957 as cited by Li 2008)

The Yaari ModelThe Yaari Model(Yaari, 1965 as cited by Impavido, Thorburn and Wadsworth, 2003)(Yaari, 1965 as cited by Impavido, Thorburn and Wadsworth, 2003)

Theory of Planned Behavior/ Reasoned ActionTheory of Planned Behavior/ Reasoned Action((Ajzen and Fishbein, 1980)Ajzen and Fishbein, 1980)

Conceptual Framework

Conceptual Framework on Household’s Availment of Insurance Product

Economic Economic and and

Financial Financial FactorsFactors Psychographic Psychographic

FactorsFactors

Demographic Demographic FactorsFactors

Pre-PurchasePre-PurchaseEvaluationEvaluation

Term Life Term Life Insurance Insurance

PolicyPolicy

Term Life Term Life Insurance Insurance

PolicyPolicy

Permanent Permanent Insurance Insurance

PolicyPolicy

Permanent Permanent Insurance Insurance

PolicyPolicy

Client’s Need Recognition

Client’s Need Recognition

Objective of Availment

• Freedom from Uncertainty

• Security

• Stability

• Prestige

Objective of Availment

• Freedom from Uncertainty

• Security

• Stability

• PrestigeDecision of the Decision of the

HouseholdHouseholdDecision of the Decision of the

HouseholdHousehold

Review of Related Literature

Rajkumari (2007)Identified the customers' attitude towards purchase of insurance products and also their knowledge on the bancassurance formats available through banks Findings: There is a low level of awareness about bancassurance among bank customers and suggested to improve insurance penetration levels.

Research Design

The research problems and objectives posed at The research problems and objectives posed at the beginning of the study will be answered the beginning of the study will be answered through a descriptive research design. The design through a descriptive research design. The design will focus on the profile of policyholders and those will focus on the profile of policyholders and those who have not availed a policy.who have not availed a policy.

Research Design

The study will also employ a correlational research The study will also employ a correlational research design with the use of two-stage regression to design with the use of two-stage regression to show how factors affect the demand for each of show how factors affect the demand for each of the two types of life insurance, term and cash-the two types of life insurance, term and cash-value, as well as the amount of life insurance value, as well as the amount of life insurance purchased by households.purchased by households.

Research Participants

The respondents for this study are selected The respondents for this study are selected clients of RCBC and RCBC Savings Bank which will clients of RCBC and RCBC Savings Bank which will be divided into four.be divided into four.

Term life

insurance holders

Term life

insurance holders

Both types of

life insurance

holders

Both types of

life insurance

holders

Cash value life

insurance holders

Cash value life

insurance holders

Households with

no life insurance

Households with

no life insurance

1 2 3 4

Research Instruments

The study will utilize the following to obtain primary data from the respondents:

survey questionnaires for walk-in clientssurvey questionnaires for walk-in clientspersonal interview during probing or personal interview during probing or closing of saleclosing of saletelephone interviewtelephone interviewapplication forms filled up by clients during application forms filled up by clients during availment of life insuranceavailment of life insurance

Data and Variables


•AgeAgeSexSex

•EducationEducation•Employment StatusEmployment Status

•Health StatusHealth Status•Number of ChildrenNumber of Children

•Marital StatusMarital Status•Educational Educational AttainmentAttainment


•AgeAgeSexSex

•EducationEducation•Employment StatusEmployment Status

•Health StatusHealth Status•Number of ChildrenNumber of Children

•Marital StatusMarital Status•Educational Educational AttainmentAttainment

Psychographic Psychographic FactorsFactors

•Attitude towards RiskAttitude towards Risk•Attitude toward Attitude toward

leaving a an inheritanceleaving a an inheritance•One’s expected life One’s expected life

expectancyexpectancy•Attitude towards Attitude towards

the sales agent the sales agent

Psychographic Psychographic FactorsFactors

•Attitude towards RiskAttitude towards Risk•Attitude toward Attitude toward

leaving a an inheritanceleaving a an inheritance•One’s expected life One’s expected life

expectancyexpectancy•Attitude towards Attitude towards

the sales agent the sales agent


Financial Financial FactorsFactors•IncomeIncome

•Home OwnershipHome Ownership•DebtsDebts

•Other Financial AssetsOther Financial Assets•Non-Financial AssetsNon-Financial Assets


Financial Financial FactorsFactors•IncomeIncome

•Home OwnershipHome Ownership•DebtsDebts

•Other Financial AssetsOther Financial Assets•Non-Financial AssetsNon-Financial Assets

Decision to buy a Decision to buy a term or cash-value term or cash-value

life insurance productlife insurance product

Decision to buy a Decision to buy a term or cash-value term or cash-value

life insurance productlife insurance product

Face value of Face value of term or cash-value term or cash-value

life insurance boughtlife insurance bought

Face value of Face value of term or cash-value term or cash-value

life insurance boughtlife insurance bought

INDEPENDENT VARIABLES

DEPENDENT VARIABLES

Statistical Treatment of DataThe following statistical tools will be used in presenting and computing the data from the respondents:

Descriptive statistics Descriptive statistics

Linear Regression AnalysisLinear Regression Analysis

Chi-Square TestChi-Square Test

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My Research Proposal

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