Islamic Life Insurance Purchasing Decision: A Preliminary Study

Abstract

This paper aims to analyze the Islamic life insurance policy or family takaful plan (FTP) purchasing decision among the Malaysian Muslim. Malaysian Islamic insurance (takaful) industry has proven to be a viable alternative in providing insurance coverage to the Muslim community. However, despite the commendable growth, the leve1 of takaful market penetration, specifically among the M u s h is relatively low compared to its conventional counterparts. In light of the above issue, this study will look at Malaysian M u s h purchasing behavior, specifically the life insurance vis-a-vis family takaful. A survey was conducted based on convenience sampling in Klang Valley. The findings revealed that respondents who are likely to subscribe the policy are those working in the private sectors, belonging to the middle income group, married and having some knowledge about the plan. In terms of sources of information on FTP, the results show that takaful agents/staff is an important medium in creating awareness and promoting takaful to the public. In addition to that almost half of the respondents subscribed their policy with Syarikat Takaful Malaysia Bhd (STMB), as the company is the main player in the industry. In terms of reasons for owning f a d y takaful plan, the most quoted reason is 'The Need for Protection'. 'Financia1 Constraint', on the other hand, is the most cited reason for non-policyholders.