FINANCIAL LITERACY AND CONSUMER PERCEPTION OF MICROINSURANCE PRODUCTS: A REVIEW-BASED ANALYSIS OF ADOPTION AND FINANCIAL INCLUSION
DOI:
https://doi.org/10.69980/vmg3bs20Keywords:
Financial Literacy, Microinsurance Adoption, Consumer Behaviour, Financial Decision-Making, Risk PerceptionAbstract
Financial literacy is now one of the key factors impacting how consumers perceive and decide to use microinsurance products, especially those coming from low-income and financially excluded segments. Even though microinsurance is getting more recognition as a tool for advancing financial inclusion and offering protection against unforeseen risks, its uptake is still scant mainly because of poor knowledge, lack of awareness and behavioral barriers. This paper examines how financial literacy influences consumers' perception, insurance knowledge and their decisions to use microinsurance. Secondary data that consists of peer-reviewed journal papers, reports and technical writings covering financial literacy, consumer behavior and microinsurance have been used for conducting the paper. A thorough and critical analysis has been employed to review the literature, compare the results and pinpoint the main factors that influence consumers' behavior in relation to microinsurance products. It reveals that being financially literate leads to greater insurance knowledge, help build faith in financial service providers and allow consumers to effectively assess different insurance options and take financially sound decisions. Besides that, the study points out that problems of accessibility, inability to pay, lack of openness and behavioral factors are among the top barriers that prevent the target groups from taking up microinsurance. It recognizes that well-targeted financial literacy programs, work on getting simpler insurance coverage and coming up with better communication strategies will definitely have an impact on consumer attitudes and encourage microinsurance scheme enrollment. The paper provides a conceptual model to explain how financial literacy interacts with microinsurance decisions which is the first of its kind, and it also points out the directions for future work that by stakeholders including governments, financial organizations and insurance firms who have been at the forefront of single-sided financial development.
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