FACTORS AFFECTING INVESTMENT IN LIFE INSURANCE OF BUSINESS POSTGRADUATESTUDENTS

Individuals are faced in making sound financial decisions such as investment and how to manage different types of risk. They requirefinancial literacy to understand Life Insurance as a form ofrisk management tool and investment. The purpose of this study was to assess the factors affecting the investment decisions of businesspostgraduate students in acquiring life insurance. This is to address the issues of having a financial breakdown due to non-establishment of security and emergency funds before putting hard-earned money in riskier forms of investment.The study was conducted on 237 Master of Business Administration (MBA) students of Polytechnic University of the Philippines.Majority of the policyholders perceive that life insurance is a multifaceted investment that functions as an income and savings in the future, a retirement fund and a protection coverage on health. This research study will identify the factors that are responsible for the buying or investing decisions in life insurance of business postgraduate students. These target respondents are equipped with advanced knowledge on various types of investment and risks.The results of this research would helppolicymakers of different insurance companies to strategize, innovate insurance products and formulate policies appropriate for individual lifestyle needs and expectations.


ISSN: 2320-5407
Int. J. Adv. Res. 8(05), 866-871 867 This research study will identify the factors that are responsible for the buying or investing decisions in life insurance of business postgraduate students. These target respondents are equipped with advanced knowledge on various types of investment and risks.The results of this research would helppolicymakers of different insurance companies to strategize, innovate insurance products and formulate policies appropriate for individual lifestyle needs and expectations.

Related Literature:
Insurance sector development in a country can be determined by insurance penetration. Research on life insurance penetration involving developing countries in the Asian region led by Sen and Madheswaran (2013) says that, Asian developing countries" insurance penetration was below 3 percent, among those were Philippines and Indonesia at .9 percent, and Thailand and Malaysia with 1.8 and 2.8 percent respectively. The penetration on Asian countries was so low compared to American and European countries. American countries have the second highest insurance penetration with Bahamas having a 4.8 percent penetration, U.S. with 3.9 percent and Canada with only 3.1 percent. European countries were leading in insurance penetration with the U.K. having the highest rate of penetration at 14.7 percent, followed by France, Denmark, and Sweden with 6.3, 6.2, and 5 percent respectively reported by the World Bank. The difficulty in penetrating Asian countries was due to the restriction of foreign insurance companies to enter a particular country. Income, inflation, real interest rates, and the youth dependency ratio were also factors that affect life insurance consumption in Asian countries.
Having life insurance is essential to human life as itprovides better economic value in the future as suggested by the known father of life insurance education, Solomon S. Huebner (1915). Given the uncertainties in life because of hectic schedule of work, late working hours, different types of pollution, food contamination and fast paced lifestyle, our health is at risk and becomes a major concern of all. In the theory of the economist Menahem E. Yaari (1965), uncertainty was one of the main reasons for consuming life insurance. It has been observed that humans tend to have behavior of attempting to lower the uncertainty and its impact that is why risk aversion was then introduced by Karni and Zilcha (1986) as one factor of purchasing life insurance. Risk averse people will tend to do any means to lower the uncertainties in life and this can be done through education. According to Outrevville (1996), individuals with higher levels of education are more aware of risk and the importance of risk management.Thus, education increases the demand of life insurance. But, in a study of "Millennials Not buying Life Insurance", millennial generation is largely avoiding purchasing life insurance (Life Ant 2014) which showed that only 21% of people aged 23-35 are life-insurance owners and appear that only older respondents are more likely to own life insurance policies.
Aside from the uncertainty of life, additional factors were added like income, wealth, interest rates and price as introduced by Nils H. Hakansson (1969). It can also be observed that income, life expectancy and dependency ratio had also a positive effect on demand for taking life insurance (Beenstock et al.,1986). As the family income earner implying that he/she has higher income, there can be a higher loss in the family financially when uncertainty happens compared to those with lower income. Employment income influences life insurance consumption ((Hammondet al.,1967) and Mantis and Farmer (1968)). Life insurance will be more demanded by individuals who are employed compared to unemployed. Household income has a greater impact in purchasing Life Insurance as researchers Brown and Kim (1993) found out that significant factors of obtaining life insurance were income, insurance pricing, inflation, social security by government, dependency ratio and religion.

Methodology:-
This paper used a descriptive method which attempted to describe the factors influencing individuals in investing life insurance. Past studies have been used and the analysis is based on the survey data collected through survey questionnaires. Respondents were 237 Master of Business Administration (MBA) students at Polytechnic University of the Philippines.
Materials used are backed up with statistical data that supported its findings and conclusions.Data were analyzed using statistical software SPSS.

Results And Discussion:-
The results from the data gathered are presented below, consisting of 237 respondents. 150 or 63% of which are currently having life insurance policies and 87 or 37% responded without having any at all. The results presented in this paper came from the 150 respondents who answered "Yes" when asked if they are having any life insurance policies.
Respondents' profile in terms of Age, Gender, Marital Status and Source of Income: As shown in the table, the age range of the respondents who have life insurance policyis within 23-25 years old comprising 62.7%. Seeing this large percentage from the age bracket entails young professionals" awareness of the importance in investing life insurance at an early age. Age is an important factor in determining the amount of premium to be paid when purchasing an insurance. Getting an insurance policy while young and healthy, premium payments are not as expensive when an individual gets it in later time.   Table 3 shows that 86.7% life insurance policyholders are single while 13.3% are already married. This significant percentage number of single post-graduate business students illustrates its high financial literacy for this kind of asset. As early as twenties, it is most likely that an individual is still single. According to BPI-PHILAM, the needs of individuals who are still single include securing financial growth through investments, supporting their parents or siblings or covering death-related expenses. The illustration above of table 4 illustrates that 94.7% of the respondents" source of income is mainly coming from their employment or day-to-day jobs. Although the respondents are post-graduate business students, only 4% are self-employed and 1.3% derived income from their businesses. This holds true in reference to PSA"s macroeconomic labor and employment statistics of employed persons by class of workers as of July 2018. In its statistical tables, 65.34% are wage and salary workers, 26.19% are self-employed without any paid employee, 3.82% are employers in own family-operated farm or business, and 4.64% are without pay in own family-operated farm or business (unpaid family workers). In reference to table 5 above, the primary influences of the respondents in getting life insurance are their family and friends comprising the 62% answer. It was followed by being influenced by an insurance agent (19.3%) and through the media (18.7%). Moreover, the majority of the respondents (60%) only owns one life insurance policy while 40% of them owns two. This reveals a fact that close circles such as family and friends can strongly entice and attest the significance of securing a life insurance policy of at least one.

Factors Affecting Investment in Life Insurance: Influence in Buying Insurance and Number of Policies Bought:
Policy Type and Payment for Insurance: , and 12% has Group Life Insurance. With respect to the duration of these insurance policies, the majority of the respondents have invested in it for 5-10 years (59.3%), 26% of them have invested for 10 years and up, while the remaining 14.7% have it for up to 5 years only. 72% of these respondents pay their insurance monthly, others prefer to pay it quarterly (20.7%), and 7.3% choose to pay it yearly or annually.

Significant Difference in Respondents' Assessment on Various Factors Responsible for Investment in Life
Insurance: The table above reveals the significant difference in the various factors responsible for investment in life insurance (income, savings, retirement, health benefit, covering risk of life, debt cover, future child education, insurance company background, insurance cost and tax benefits) when grouped according to respondents" profile. Results of p-value of more than 0.05, the assumed level of significance, the null hypothesis is accepted. Hence, when respondents were grouped according to gender and source of income, their assessment on the various factors responsible for life insurance investment were statistically the same, accepting the null hypothesis.
On the other hand, obtained p-values of less than 0.05, the null hypothesis should be rejected. This implies that when respondents were grouped according to age and marital status, their assessment of these factors differ significantly, rejecting the null hypothesis.
Recommendation:- 1. The high percentage of young adult females inclined in acquiring life insurance policies has to be taken by insurance companies and design insurance policies that will match for their lifestyle needs. 2. Insurance companies should continue to introduce innovative products to offer variety or choices to young adults whom are in early days of their careers. These tailored-innovative products should come up with more return, high risk coverage on health benefits, and low insurance premiums. 3. For greater penetration, insurance companies should formulate marketing strategies in reaching out more potential customers through taking advantage of influence of their family and friends.

Conclusion:-
In today"s highly competitive job market, it is imperative to constantly improve one"s skills, knowledge and abilities. It has been evident through the increasing awareness of continuing learning after completion of a bachelor"s degree and obtaining a post-graduate study. In Philippines, there are emerging numbers of college graduates pursuing a post-graduate degree right after or few years after college graduation.
Under a business-graduate program such as MBA, both theoretical and practical learning from the university has been applied such as financial literacy through acquisition of Life Insurance Policies. According to this study, young adults tend to secure their financial health in the future. Young adult females were identified as the most cognizant in the acquisition of life insurance policies compared to male counterparts. However, about 37% of the respondents still don"t have any life insurance policies. The study was focused in identifying the underlying reasons and facts that influence MBA students in purchasing life insurance. Majority of the policyholders perceive that insurance is a multi-faceted investment that functions as an income and savings in the future, a source of additional fund during retirement and protection coverage in health uncertainties. It can be concluded that age and marital status affects greatly in the decision of purchasing life insurance policy.