Life Insurance: Buying Behaviour among Low Income Rural Consumers in India

Abstract

This study explores various aspects of buying behaviour of low-income rural Indian consumers for life insurance products. A sample of 10,026 low-income rural consumers and non-consumers is surveyed across 296 different villages in 10 tehsils of two districts in Madhya Pradesh, India using a structured questionnaire consisting of 52 questions. The findings suggest that awareness, acceptability, and trust are major concerns for low-income consumers when purchasing insurance products. However, customer satisfaction is high amongst the existing buyers of insurance. The study highlights areas of concerns and nuanced differences in consumers’ buying behaviours based on their attitudes, beliefs and values. Key areas of concern include low level of product awareness especially related to less focused aspects of buying insurance, high dependence on sales agents, low trust on insurance firms for death claims, and lower perceptions of insurance as an investment asset. The areas of strengths include fairly high benefits derived from insurance, high affordability, and low regret of purchase. The implications for managers and policy makers are to develop buyer-seller trust further to enhance market penetration, increase product awareness to increase insurance adoption in rural areas. These results have several implications for the regulatory bodies too in the context of rural markets.