Bridging the intention-behaviour gaps in life insurance purchasing behaviour

Abstract

Life insurance acts as a necessary protective instrument for household financial resilience; however, many consumers continue to make suboptimal purchasing decisions, such as underinsurance, overinsurance, or reliance on inappropriate policies. This study integrates the Theory of Planned Behaviour (TPB) with insights from behavioural finance to examine the determinants of optimal decisions in life insurance purchasing behaviour. Specifically, financial literacy and perceived risk are incorporated as additions to TPB, while hyperbolic discounting is introduced as a moderator for the intention-behaviour gap. An online survey was employed to collect data from 304 respondents, and partial least squares structural equation modelling (PLS-SEM) was applied for analysis via SmartPLS 4. The results indicate that optimal purchase decisions are significantly influenced by subjective norm, perceived behavioural control, financial literacy, and perceived risk, whereas attitude is not. Purchase intention partially mediates several of these relationships. Hyperbolic discounting acts as a significant moderator for the intention-behaviour link. The findings contribute to the existing literature by integrating TPB with behavioural finance in decision-making and addressing the importance of financial literacy, perceived risk, and social influence in insurance selection. Policy implications include building consumer confidence through targeted literacy initiatives, strengthening disclosure standards, and developing community-based interventions to promote optimal insurance coverage.