Income is often viewed as the main determinant of life insurance demand. However, in the last two decades, the world’s life insurance penetration has continued to decrease even as income grows. This study investigates the relationship between income and life insurance demand using panel data from forty-one countries from 2013 to 2022, along with education and life expectancy as control variables. The study finds a non-monotonic relationship between income and life insurance penetration and between education and life insurance penetration, while life expectancy shows a monotonic relationship with life insurance penetration. This study provides significant policy implications for insurers to predict life insurance demand and suggests that non-high-income countries emphasize the improvement of their life insurance sector development.

This study measured the risk aversion of nineteen selected countries using Szpiro’s approach and analyzed its effect on life insurance demand. Additionally, income and education were included as control variables and tested for their effects on life insurance demand and risk aversion. The results show a positive effect of risk aversion on life insurance demand, while income has a positive effect and education has a negative effect. We also find that income positively affects risk aversion, while education negatively affects it. These findings support the increasing relative risk aversion hypothesis and have significant implications for life insurance demand and pricing analysis.

Background: Life insurance demand in Indonesia is still low, despite its positive contributions to the social and financial sectors, and income continues to grow. The increase in literacy and inclusion of insurance also cannot positively affect life insurance demand.Purpose: This study analyzes the effects of economic and demographic factors on life insurance purchasing behavior, including income, interest rates, inflation, education, and life expectancy.Design/methodology/approach: This study uses secondary data with annual frequency from 2002 to 2022 that obtained from Financial Services Authority, Bank Indonesia, and World Bank. This study employs ordinary least squares (OLS) to estimate data using Eviews 10 software.Findings/Result: This study shows that income, inflation, education, and life expectancy have a positive effect on life insurance purchasing, while interest rates have a negative effect. Interest rates and life expectancy show significant effects. Demographic factors better explain life insurance demand than income factors, and the use of life insurance density provides better predictions than the use of penetration. This finding helps insurers in demand prediction and the government in developing life insurance policies. Conclusion: Economic and demographic factors affect life insurance demand in Indonesia.Originality/value (State of the art): Nowadays, there is a growing consensus to better use the term "non-high-income country" than "developing country" in country level analysis. This study is one of the first in a non-high-income country on the topic of life insurance purchases within the context of Indonesia. Keywords: consumer purchase behaviour, determinant, Indonesia, life insurance, non-high-income country