Motivational and Perceptual Factors Determining Individual Preferences for Investment-Linked Insurance Products: An ISM–MICMAC Analysis

Abstract

Buying life insurance means creating a financial safety net for a family during tough times. In India, where most people belong to middle- and lower-income groups, having enough extra money to buy insurance is often seen as a privilege. Many adults do not view it as a priority, and some see it as an ineffective investment option since traditional insurance policies do not provide any return if the policyholder survives the term. For people with limited income, this creates a dilemma: should they put money towards essential financial goals or spend it on life insurance? To solve this issue, Investment-Linked Insurance Plans have been created in which at a time two benefits are offered. Additionally, the government has introduced various initiatives and incentives to improve insurance access across different socio-economic groups and regions. Despite these efforts, the decision-making process is still complicated as different motivational and perceptual factors influence buying decisions directly and indirectly, and overall insurance penetration remains low. So, it is important to understand the factors which drive the buying decision. In this research article, fifteen such factors are identified, and Interpretive Structural Modelling (ISM) and MICMAC analysis is used to analyze and structure different variables which influence decisions for buying investment-linked insurance plan. The findings of the study reveal that Age of the Insured and Tax Benefit are the foundational drivers, and all other remaining factors act as dependent variables. The study contributes to the Insurance and Financial Services literature by mapping consumer decision factors and may help insurers to design insurance products by strategizing the product position and marketing of the ILI products more effectively.