Research from India published in the International Journal of Business Excellence suggests that personality traits, rather than simply income or family size, has a role to play in whether a person takes out life insurance. The finding has implications for insurers, policymakers, and financial planners alike.
The researchers surveyed 580 individuals across India and found that specific personality characteristics are closely tied to a person’s view of financial risk. Risk aversion, they found, significantly influences the intention to buy life insurance. They add that three traits from the psychological Big Five model (conscientiousness, being responsible and organized, neuroticism, the tendency to emotional instability, and openness to experience, curiosity and broad-mindedness) were found to affect risk aversion. Risk aversion itself then mediated a person’s life insurance intentions.
Risk aversion, in this context, refers to an individual’s tendency to avoid uncertain outcomes, especially those with potentially negative financial consequences. It has long been assumed that buying life insurance is broadly a rational decision based on life stage or income. However, this research shows that a person’s character and dispositions affect their perception of risk and security and so their intention to take out life insurance.
The researchers suggest that the finding is particularly relevant across India’s emerging economy, where changes in social structure and increasing urbanization are changing the way in which families manage their financial responsibilities. As extended families give way to nuclear households and more younger people enter the workforce, the role of life insurance has expanded beyond income replacement. It now encompasses wealth preservation, estate planning, and long-term financial independence.
The work could help insurers better predict customer needs and tailor their products accordingly. By taking this behavioural approach, it might be possible to close the protection gap, the difference between the amount of insurance coverage a person has and what they actually need. This gap is alarmingly wide in developing countries.
Elangovan, J., Premkumar, M.D. and Yoganandan, G. (2025) ‘Exploring the mediating role of risk aversion in the relationship between personality traits and life insurance purchase intention’, Int. J. Business Excellence, Vol. 36, No. 5, pp.1–26.