Effect of Financial Literacy on Insurance Policy Decisions Among University of Nairobi Postgraduate Students

Abstract

The study sought to determine the effect of financial literacy on insurance policy decision among University of Nairobi postgraduate students. Before this study, several studies had been conducted on how financial literacy affected insurance policy decision. The previous studies however were done in different contexts including countries. None of them was done in universities. This therefore resulted to gaps that the current study sought to fill. The variables of the study were financial literacy, emotional and economic factors. The study was underpinned by the life cycle hypothesis of savings and Goal setting theory. The study employed a descriptive design. The population of the study comprised of 1,224 postgraduate students at UON. The sample size was 122 respondents. Questionnaires were used to collect data and the analysis was done using SPSS. With a response rate of 79.5%, the study revealed that 67.1% change in insurance policy decisions among post graduate students is explained by financial literacy, emotional and economic factors. The study concludes that financial literacy, emotional and economic factors significantly influence insurance policy decision. The study recommends that the management of the University of Nairobi should encourage post graduate students to read policy documents of insurance decisions. The management team of all insurance companies should form alliance and cooperation with the University of Nairobi to educate post graduate students on financial literacy and insurance policies. Future studies should however be done in other universities since the current study only focused on the university of Nairobi post graduate students. From regression results, the value of R square was 0.671, showing that the studied variables only explain 67.1% change in insurance policy decisions. Thus, there are other factors (apart from the studied ones) that influence insurance policy decision which future studies should focus on.