Impact of Perceived Risk Factors on Consumer Buying Behavior

(An Empirical Study on Private Life Insurance

Companies of Larkana)

Thesis Report

Supervisor:

Mr. Zeeshan Rafique Sylvester

Department of Business Administration SZABIST

Authors:

Sikandar Ali Shaikh (1211185)

Zubair Ahmed Manghriyo (1211192)
Sajjad Ali Sario (1211181)
Maria Abro (1211111)

In Partial Fulfillment of the Requirements for the Degree of Bachelors of Business

Administration BBA

January, 2017

SHAHEED ZULIFKAR ALI BHUTTO INSTITUTE OF SCIENCE AND TECHNOLOGY

(SZABIST) LARKANA

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 1.0 Introduction

1.1 Preamble

This research is aimed to analyze consumers attitude towards buying life insurance products and
to understand their purchase ad repurchase intentions so that we can analyze risk factors like
financial risk social risk and time risk that usually bias on purchase decision making of customer.
The research has been conducted related to risk and uncertainty has great empirical and
fundamental contributions. Mostly the literature is explaining two approaches i.e. cognitive and
emotional in order make sound decision under the risk and ambiguity, that’s why we would use
theoretical framework in this research so that we can also analyze the behaviors’ of customers
and the fundamental objective of this study is to find out risk indicators which effects on
consumer buying behavior.

Research paper is supposed to explore the different ways, by which we can get information about
the life insurance products which can help us to make better decision to avoid from risks,
analyzing repurchase intensions of life insurance customers’ and cross comparing the same in the
sphere of public and private sector life insurance companies.

It is important to have knowledge about insurance when you are going to purchase the insurance
policy and one should have basic know-how about the finance. The insurance and economic
development of our country moves with each other towards direction of growth, Insurance
companies play role of financial intermediaries and perform very applicable functions in our
economy. It is very important tool for controlling over risk, Life insurance observation has
changed to a risk management device rather than simply a tax saving tool, it basically help to
ensure that the funds would be provided for development of the country and also provide
strength to government to take risk. Mostly the consumers when they are going to purchase any
product, they have always influence of their emotions on their purchasing decision and they
mostly focus on their future as compare to present and wish to have secure and peaceful life, at
this point of time the concept of life insurance emerges to support the consumers who are very
much conscious about their future. Cultural importance, and variety of products categories have
changed buying behavior of life insurance customers to a great extent, Insurance product
features, therefore, create differences in perception among the insured’s and the related benefits
like taxation, loan facilities etc. change the purchase behavior of people on a dynamic basis.

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Estimated mechanism of consumer satisfaction is used around the factors which leads customers
to think of repurchase. Satisfied customers have high future intentions to stay with company and
future repurchases intensions. The life insurance serves the society through different ways in
order to increase the stability by eliminating worries and make it able to take ingenuity and live
prosperous life. The insecurity has been changed into security by transferring risk to insurance
companies which are promising a handsome return at any time when someone requires it. If we
look at around us, we will find that any sort of family or any entrepreneur or traders, they have
their economic values of their life in terms of money and life. So, it is necessary to have a
backup which can help them, if any mishap occurs against the wealth which they possess, it can
only be possible by purchasing insurance policy in order to have secure future and property, life
and liberty.

Insurance was also used in old times there are some studies related to insurance in Islamic books
this is old type of agreement to help people in damage. It was appeared in 10 th century B.C.
There are ancient types of insurance which emerged in China about 5000 years ago when most of
the families residing in houses which were floating and they contracted to link their homes and
nearby stores so that if one any damage occur to one house that would also effect on others, by
doing this, they were connected to each other as this was mode of transferring risk and they all
were responsible for this. So, there was strong bonding with all of the houses and less likelihood
of drowning the houses.

After this, the idea of insurance was transferred among different nations such as Phoenicians and
then after to the Lombardians, which were located in north Italy. The merchants got benefit from
this idea because this was helpful in their business as it was reduces their risks, in that time
mostly the traders used to send their goods by sea. There was huge risk involved, so with the
help of this concept they got benefit and secured their businesses.

These are some oldest forms of insurance which were practiced before Islam by Arabs.

There are following elements which are describing the oldest form of insurance:-

 The insured party: Either a person or company.

 The Insuring agency: The customer who is entering with insuring agency to secure the
life, property and his business for certain amount of fee.

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  The protection against risk:The conditional accident may or may not happen. The
happening or not happening of any particular accident does not lie on the wish of either
party towards the contract.
 The Amount/Premium: The amount which the customer has to pay the insuring
company against policy which he purchased according to the contract. The premium is
determined by an agreement which is executed between the customer and insuring
company.
 The Amount Protected: The amount which insurance company has to pay to its
customers or to whom the names the amount was insured when particular risk occurs
according to the contract executed between customer and insuring agency.

The insurance used as a tool against the risk which can be determined by the descriptive and
empirical means. The economy and society both can be benefited by insurance. Mostly,
insurance companies in general agree to take unfavorable risks, but the problem occurs when
these companies do not have an efficient system to manage these risks, so these companies in
this situation do not remain in business and generating sufficient amount of income to protect
their clients against risks. The companies who have an efficient system remain in the business
and serving the economy and society as a whole.

It is proved that the insurance companies should have efficient system to manage these risks in
order to earn the profit and satisfy the needs of their stakeholders.

The portfolio for insurance companies is the collection of policies. No matter, such policies are
very risky but by using diversification techniques we can minimize the risks of these policies.

The difficulty of buying process of an inclusive package of insurance was highlighted by one
showers and shotick, they believed that, such type of problems as investigating financial needs
and selecting a comprehensive package of insurance creates a complex process for customers.
(Kunreuther & Pauly 2005) submitted that mostly individuals to whom insurance might be an
attraction factor are reluctant or not in a position to accumulate or process the relevant
information for making good decisions due to scarcity of time, efforts and costs linked with the
process.

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According to Schwarcz (2010), the decisions regarding insurance are considered to be the
complex ones which most of the consumers expresses. They need to forecast the risks which they
will face in the future and those who are improbable.

Ulbinaite (2011) submits that it is very difficult to sell the insurance products to customers and
also same for the customers to purchase, because they do not have much information about
future occurring events and they do not have enough knowledge about finance to properly
predict the risks and return. This is one of the major factor which creating hindrances in buying
the insurance products.

Ulbinaite & Le Moullec (2010), he stated that there are two major factors which are the need and
income level of the customers for purchasing insurance influencing purchase decision. The
researchers examined that need is found to be a very major element which comprises of
interpersonal factors such as to understand financial products, cultural influence, network of
interactions, awareness level of consumers and their perception for life, liberty and property to
invest in insurance products.

While defining the income for insurance the researchers point out the purchasing power of
consumers and equilibrium between income and expenditures of consumers.

1.2 Research Background

It was previously found that most of the students have no insurance or having automobile
insurance because of insufficient amount and low income level. He analyzed that male relatively
use more insurance as compare to females. They use insurance because they encounter road
accidents relatively greater than females. This was the major issue found in this research.
(Michaela Iliesco 1975).

It was agreed that due to greater risk and insecurity the individuals tend to have negative
perception regarding life insurance they fell lack of insecurity and losses of wealth if they
purchase insurance products. Mehr & Cammack (1976).

Kunreuther (1979), it is not the necessary size of loss which mostly forces people to buy
insurance but it is frequency of losses which force them to buy life insurance.

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(Kaneman & Taversky, 1979) he proposed in his research that customers who are buying
insurance should avoid all types of risks.

Kahneman& Tversky (1984), they also came to know that most of the people are unaware about
the probabilities and overall risks related to insurance products.

Greenleaf and Lehmann (1995), Tversky and Shafir (1992), they proposed in their research that
the much insurance products you will as a company the chances of occurring risk. This will
create hazard in consumer mind.

Stephen Diacon (2004), in his research concluded that various perceptions of consumers and he
found that where there is zero investment risk and probabilities and healthy return consumers
are more likely to invest in those companies of life insurance. He further added that there is
major difference between the financial advisor and lay customer.

Financial experts are always conscious about their offered products they care mostly that there
offerings should be less risky and less loss averse they always make their offerings flexible for
investment. They make effective policies in order to attract their customers and keep their
processes flexible and easier. This can reduce biasness and distrust of customers as most of
customers feels that the experts provide insufficient information that’s creates troublesome later
on, so customers need to educated in order to have mutual benefit.

(Helmut Grundl, Thomas Post & Roman Schulze 2008), they found in their studies that
demographic is most dangerous risk which is causing too much effects as life cycle changes,
same for the life insurance companies.

Risk management is effective way which provides handy information to customers related to
assessing and controlling the risk, it is systematic tool by which consumers can minimize the risk
occurrence, earlier there were traditional risk approaches which were used to minimize the
likelihood of risk. (William’s et al., 2009).

Solomon (2008), he found out that in marketing we mention attitude as an object consumer
attitude is sometimes known as attitude of product and its positioning.

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Dr. Lars Perner (2010), he stated that attitude satisfy individuals inner motives and those motives
effects consumer buying behavior.

Dr. Ashfaque Ahmed (2013), he proposed in his study that mostly individuals have less
information knowledge regarding insurance and related services. Mostly in rural areas the
residents are not that much educated and knowledgeable they have very less information
regarding insurance products. The major objective of every customer is to get the healthy return
if they invest in insurance they get the good return which will surely secure their lives. Every
customer whether he is lives in urban or rural they have distinguished viewpoints related to
insurance products.

There are various types of variables which psychologists have found that are useful in gaining
consumers perception.

Sharma (2007) performed study on insurance perspective in Eastern up with the objective of
probing into the reasons or the factors behind the purchase of the insurance product. It was found
that according to 93.86% of respondents insurance policies are considered crucial for risk
protection.

There was one study conducted which aim was to know about various factors which influence
purchase of life insurance products. Study came with the results those 93.68% consumers
reflected crucial for risk protection.

1.3 History of Insurance in Pakistan

In 1948 for the very first time separate institution was established under the governance of
Commerce ministry of Pakistan. The major objectives were set which were to protect the
insurance customers listen their queries insurance companies were licensed under this
department. The insurance companies are greatly contributing to GDP up to 54% which is indeed
magnificent. Moreover the remaining 24% is contributed by the transportation
telecommunication and finance insurances. If we look at current scenario the insurance market
has undertaken crucial changes in their systems and approaches. It has been updated with the
immense due to merging of insurance companies with that changes can be seen at greater extent.
As per the 2000 ordinance those companies who were unable to meet the least requirements of

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the capital were suggested to shut down those companies. The day by day security exchange
commission is working hard to make most versatile insurance industry of Pakistan making the
easier processes and effective measures.

In current situation the Insurance companies has brought up greater level change has improved a
lot and still improving there has been huge improvement in year 2015. There were some problem
related to bonds Sukkuk that was successfully solved and this brought benefit at maximum level.
With increasing and better economic situation Pakistani market is going to be very handy for
insurance companies and with Pak-China economic corridor market situation are getting day by
day better which ultimately provide benefit to insuring companies.

Situations of insurance have been improved from last 5 years. The insurance industry is
increasing gradually it has shown magnificent growth that is surely positive. Because of growth
positive attitude is developed with in the market of life insurance industry. Which is ultimately
provide benefit and secure the lives of customers.

The rules were forms at the time of Prophet Muhammad (Peace be upon him). Those rules are
still practiced in Pakistani Insurance market they are acting and running their insurance
companies as per Islamic rules and laws.

1.4 Private insurance companies in Pakistan

1.4.1 Adamjee insurance company: One of the companies that is providing the
insurance services which is incorporating as the civilian company. It has many branches
in Pakistan. This is known to be one of the best insurance service providers surpassing
the relative competitors.Fluctuation, inflation, growing taxes debts and interest rates
continuously effect your investment. It secures Munafa the extra benefit or return has
been designed for the preservation of your savings and growing it to level where you can
easily realize your protection. They have very effective system and approaches and sets
distinctive values which ultimately help customers.

1.4.2 Askri General Insurance Company:It has created very positive image in
consumers mind, another very improved insurance company with very competitive
strategies and best systems leading in the market and making their customer experience

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 delightful that’s why it is going to be emerging and successful insurance company. Their
target is to become market leader perform relatively better than existing insurance
providers companies. It took shorter period to gain such popularity in market this is all
because of their policies and procedures.

1.4.3 Asia Insurance Company Limited:It is also a public limited company it has
several branches in all over Pakistan which are interconnected with each other.

1.4.4 American Life Insurance Company:It is a private life insurance company which
is providing its services located in Multan, Punjab. It is working as intermediary as like
agents.
1.4.5 Allianz EFU health Insurance Company:It is the first specialized health
insurance company in Pakistan. It offers a lot of medical services in order to make life
healthier and prosperous. It is one of the best life insurance because it is working at
global level with most occupied and professional insurance group.

1.4.6 Alpha Insurance Company Limited:It is most antique insurance provider in

Pakistan that started operation from 1951 soon after formalized insurance commission it
is also part of state life of Pakistan. It has prominent number of shares that is 94% which
is making it leading insurance provider. It is well reputable because of its excellent
services and strategies.
1.4.7 Asian Mutual Insurance Company: It was established by Dr. Muhammad Nasir it
is one of the old insurance company rendering its services it is one of the most
progressive insurance company.

1.5Insurance Products

There are three insurances that most financial experts recommended:

1.5.1 Life Insurance

It has been understood that life insurance is a source through one can secure oneself from the
financial loss. This is the tool which is used to hedgerow against the risk and doubtful outcome.

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The one who provides insurance is known as insurer who promised the monetary return against
the loss or damage. It is a transaction between two parties in which one party pays some amount
to secure his/her business or any kind of object from certain risk and any mishap which can
cause them huge losses. In this transaction may be the overall value of object may not be
considered in terms of finance but it can be compensated to the other party to the some extent.
So, with the help of insurance, the insurer will charge some amount as it can be mutually
beneficial for both the parties.

1.5.2 Health Insurance

This is the second type of insurance which deals with health related issues including medical
expenses and overall expenditures related to health. Mostly people get insured in order to save
themselves from any kind of disease or health issues. This insurance provides them security in
terms of their personal as well as family health related problems and against this the insurance
companies will charge certain amount of percentage and when the people need money to meet
their health expenditures, the insurance companies will provide them accordingly as per
agreement.

The government or central agency or any private companies governed the benefits which are
provided to the customers. The definition which is given by the one of the prominent insurance
agency of America provides returns against the injury or any damage caused by uncontrollable
means. There are various insurances are included such as disability, transportation accidents,
demise of person or splitting parts from body.

1.5.3 Auto and Long term Disability

In this type of insurance, the insurance provided against those injuries and aliments which
hindering people from working. The child birth is not covered in this insurance. It is usually for
the longer period of time rather than shorter period.

Common long term disabilities claims are defined by council for awareness against disability are
mentioned below:
1. Joints related issues
2. Tumor
3. Fatal damages/injuries

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 4. Cardiac problem
5. Perceptual disorder

If one has injuries related to fatal injuries, one may have to wait for a longer period of time
before claiming against the insurance. It takes usually 90 days to process the paperwork,
sometimes it takes much more time. When your claim is accepted you can get benefits till the
age of 65, once you surpassed from this age, you will not be able to get benefits furthermore.
Every insurance product covers various types of benefits related with our life and each one of
them is crucial for our future.

Already there is a lot of discussion has taken place about insurance and its benefits to the
customers and time and again the financial advisors suggested that there is almost need of having
insurance policies and it is problematic to solicit which can effectively be met with the
requirements of the customers. It is depend upon individuals and their situation to purchase the
insurance policy accordingly. The companies for planning insurance portfolio which consists of
different type of policies should consider the demographic elements such as age, lifestyle and
employment related benefits.

1.6 Research Objectives

This research paper is basically aimed to identify the risk factors that affect consumers while
purchasing insurance products. The customers’ perception varies according to their needs and
their requirements.
The main objectives of the research are:

 To analyze the impact of perceived risks factors(financial, social and time risks) on
consumer buying behavior.
 To find out the relationship between perceived risk factors and consumer buying
behavior.

1.7 Problem Statement

To understand the consumer buying behavior is very important for businesses in order to design
strategies for them. The customers’ attitude towards life insurance is mostly negative, this

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research aims to understand the perceive risks factors i.e Financial, Social and Time risk which
influence the negative buying behavior towards insurance products.

1.8 Research Questions

 What is the impact of perceived risk factors on consumer buying behavior?

 What is relationship between perceived risk factors and consumer buying behavior?

1.9Research Scope/Limitations

 The research paper will be completed within 4 months.

 Survey will be conducted from SZABIST Larkana Campus, SMBBU and QUEST.
 This study is limited only for Larkana Region insurance Companies who are providing
insurance facilities.
 This paper includes three factors in purchasing behavior of insurance products i.e.
financial, social and time risk.

1.10 Justification

Based on risk factors and perception of consumer behavior the relationship among perceived risk
and consumer buying behavior has been analyzed and to know how that feeling influence
consumer buying behavior, there are three factors of risk that influence consumer buying
behavior those are Time, social and financial.
In this research the various factors will be considered to which influencing and are creating
hindrances in buying insurance.

1.11 Assumptions

Research paper examines not only perception related with product but also evaluate the different
attitudes that trigger the perception through survey by asking different questions from graduates
and students which will create awareness regarding lie insurance products.

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In this research paper, the influence of overall consumers’ attitude towards risk and uncertainty
related with the products will be analyzed.

The findings showed that there are risks factors like time financial and social have significant
influence on product perceptions. This research paper will make consumers aware regarding life
insurance products

1.12 Research Gap

After reviewing existing journals it is has been found that there are certain variables which are
affecting the consumer buying behavior towards life insurance i.e Financial, Social and Time
Risk. On this topic there are many studies have been conducted but there is not any study found
in Larkana. This study aims to find out the impact of these factors on consumer buying behavior
regarding insurance companies which are operating in Larkana Region.

1.13Beneficiaries

The students, professionals and life insurance companies.

1.14Definition of Key terms

1.14.1 Perceived Risk: The consumers commonly before purchasing any product they perceive the risk
which is involved in the product specially they consider the risk in costly items. Most of the time, they
focus on those products to whom they have certain fears and chances of losses and generally the product
which is priced heavily.

1.14.2 Financial Risk:Every people considers this risk before taking purchasing
decision because it involves the possibility of loss which cannot be compensated and
they think that while buying this product, they will lose their money. It plays very
significant role in making decision about products in view of customers.

1.14.3 Time Risk: Time is very important for today’s customers, they do not want to
waste their even single minute on useless things from which they do not have
benefit. That’s why the risk has strong influence on making purchasing decision
about certain product. Duration can be a problem for consumers in purchasing life
insurance products.

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1.14.4 Social Risk: Social risk is involved in purchasing of life insurance products. Generally,
people do not buy insurance policies because of their social class in which they are residing and
will not allow them to go towards insurance due to certain beliefs which their class possesses.
This risk also has major influence on decision making towards any products.

1.14.5 Purchasing Behavior: The behavior of consumers which is related with their attitudes,
feelings towards a particular product. This can be judged through by their preferences, intentions
and decision which they are taken in their routine life when they are going to purchase the
product or necessary things for their survival and this will also help the marketers to get the
profits by analyzing buying behavior and according to this design promotional strategies in order
to create a sustainable competitive advantage in the market.

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 2.0 Literature Review

2.1 Perceived risk

The original concept of perceived risk is extending out from the psychology by Harvard
University Raymond A. Bauer. The dimensions of perceived risk are the specific contents or
types of perceived risk. Bauer held that the perceived risk will affect the consumer’s purchase
decision, but he didn’t analyze the perceived risk’s specific types. Followed Bauer’s theory, Cox
and Rich gave the specific explanation of perceived risk. He believed that the perceived risk
included at least two factors, uncertainty and adverse consequences. Following the theory of
consumers’ perceived risk, consumers will perceive risk when they face uncertainty and
potentially undesirable consequences as a result of purchase. The more risk consumers
perceived, the less likely it is that they will make a purchase. Therefore, Perceived risk is
powerful at explaining consumers’ behavior because “consumers are more often motivated to
avoid mistakes than to maximize utility in purchasing” (Mitchell).

Before purchasing any product most of the people perceive the risk which is involved in the
product as to avoid from loss. They also interpret the information in their minds about the
product before purchasing it. According to the researchers, perception is not only related with
physical incentive but it has some relation with environment and inside of the customers.
Although, the perception of consumers changes accordingly with the conditions as they meet
with them.(Kotler & Keller 2006, Santana & Loueiro 2010).

Risk is the one of the major component in buying any products, it add value to explaining more
information and searching behavior in purchasing the products, two theoretical perspectives has
been researched one is that it is based on uncertainty and second on cost based in its results,
(Barne et al., 2007). Perceived risk has a greater impact on consumer buying behavior and this
perception badly affects to buying events, (Featherman & Pavlou, 2002).

Bigger the sensitivity of probability of loss, more the consumers are reluctant to purchase the
product because they always think 100 times before investing the amount on any product.(Zhang
et al., 2012). It is not necessary that every consumer has same risk and cost perception, (Martin
& Camarero, 2009). The doubtful outcome in which, one only knows about the probabilities
which will occur in the future.(Mandel 2003). Though it has not been given a proper and defined
definition of perceived risk so we have proposed from the study of (Stone & Gronhaug 1993), by

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as when an individual practices, "A particular expectation of loss" (Herrero Crespoet. al. 2009, p.
261). Risk has rich publication history, while making decisions and during purchase time and
many theories given by different authors to define risk perception in their perspective.

Risk is not defined as only psychology perspective but it shows the somehow the relationship
between purchasing conditions of consumer has internal himself. Therefore perception of
perceived risk diverges on the basis of Consumers nature. (Santana & Loureiro). Results toward
specific decision making can be situational with great relation to future outcomes and events
there can be chances of occurrences, (Tombu & Mandal, 2003). Consumers risk can be reduced
if an organization wants to reduce it, different types of business risk can be controlled if firms
start analyzing and identifying the consequences, (Lim, 2003). He further explained that different
risk factors have negative consequences and somehow problems in correct definition for that
there are chances to overcome and understand the sources of perceived risk factors.

When consumers are going to purchasing insurance policies they believed to have some kind of
risk involved that will affect their decision making towards buying the insurance products. This
will also create negativity in the minds of consumer and restrain them towards positive buying
behavior. (Kotler et al.,).

The literature review related with marketing perspective suggesting that, the risk-taking behavior
can be measured by individuals’ attitude towards purchasing. There is lot of discussion on
perceived risk which is defined in many ways by different researchers. There is also huge debate
regarding facts of opinion of the researchers.(Bauer)

2.2 Risk Dimensions

Beck & Webb (2003), the research was conducted on topic related with urbanization and demand
of life insurance suggested that positive mark was seen between them. The term urbanization
suggests that moving of people from backward areas towards metropolitan cities this will also
reduce the costs of spreading of insurance. The spreading costs are considered to be the higher
costs in life insurance companies, the low costs confidently supporting the insurance distribution
and demand. In addition, the people who are residing in the cities they have some know-how
about the risks which are involved in insurance as compared to those who are living in backward
areas this will create the positivity of urbanization on the demand of life insurance. Nevertheless,

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but the results of researchers do not consider the effect of urbanization on the demand of
insurance.

There are some areas which were considered as dimension of perceived risk. These areas have
strong impact on consumers purchasing decision towards insurance and they play very important
role by keeping away the consumers from moving to insurance policies due to their bad
experience. (Lingying Zhang, et al., (2012).

2.2.1 Financial Risk

Although, the insurance industry has achieved significant growth and at current position giving
positive scenario for future, but there also negative sides which are looming over the unusual
method of insurance industry. The people while buying the product they perceive the financial
risk is most important factor before taking decision. Because they have sense of apprehension
that while purchasing product they may lose their money or may product not meet their
expectations. Further, the consumers pondered it as sense of losing their amount which they have
invested and it is evident from the above position that the financial risk is considered as a major
barrier in buying insurance policies. (Maignan & Lukas, 1997).
Financial perceived risk such as fear of losing money and probability of disclosing basic
information of the consumers has negative effect on consumer buying behavior, this finding is
compatible with the findings of (Forsythe and Shi, 2003; Almousa, 2011; Javadi et al., 2012), in
these studies, financial risk is an important factor for not buying policies.

2.2.2 Social Risk

The people who mostly care about the family and friends, they pondered the social risk as a
major factor while purchasing the product. (Li and Zhang, 2002). Because, they think that if
they buy the product that may result in disapproval by their friends and family members and loss
of social status.(Stone and Gronhaug, 1993). Mostly, people while buying any product they
always ask to their friends and take guidance from them to purchase a particular product in order
to avoid from social risk. The social risk is considered has significant impact on making decision
when one going to purchase the life insurance policy and there is always a threat of disapproval
by members of society in which one survives.(Li and Zhang, 2012).

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Social perceived risk has negative impact on consumer buying behavior, and also there is a
negative correlation between social risks perception and consumer buying behavior. (Carolina
Afonso et al,. 2016).

2.2.3 Time Risk

The consumers mostly ponders the time more important than money thus they considered time
risk in purchasing decision. Because, they have perception that while purchasing the product
they may lose their time and effort. (Hanjun et al., 2004). Moreover, the people assuming that
while purchasing insurance they will not get their claim on time and may face embarrassment
while receiving the insured amount. (Forsythe et al., 2006).

The perceived time risk and perceived social risk have negative effect on consumer buying
behavior, in contrast with the findings of the previous studies (e.g. Hanjun et al., 2004; Forsythe
et al., 2006; Almousa, 2011; Zhang et al., 2012) where time and social risk are important
significant risk factors for not buying policies. Consumers are not patient to wait a long time
because they usually take delight in seeking new thing, so a longer waiting time for delivery and
service would make them lose their interested in. (Lingying Zhang et al., 2012).

2.3 Factors/Elements of Perceived Risk

The risk in simple terms is a possibility of loss and a threat that may prevent or hinder to achieve
the business objectives. (Bauer 2006) submitted that there is always risk involved in purchasing
any product and mostly people have considered the risk when investing their money to purchase
any type of product. The people also do not know about the consequences of risk which will
affect them in the future. It is natural phenomenon that, no one wants to lose his money, time and
efforts so while keeping in mind that, they pondered the risks before going to purchase the
product.

The researcher has defined that, the possibility of loss, time and effort that consumers perceive
while purchasing insurance policies is considered to be as perceived risk. The most of the people
who are risk averse and do not want to take any risk and try to have a safe investment vehicle in
which they get the return peacefully that will reduce the purchasing behavior towards risky
products.

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In the light of above position, the perceived risk is pondered as the most important event when
purchasing policies. The consumers who are most risk averse and risk perceiver before
purchasing insurance products the negative purchasing behavior is triggering. (Mitchell 1999).

2.4 Theories related to perceived risk

As per previous research, the theory related with perceived risk analyzed the consumer buying
behavior in regard to making purchasing decision while remaining under uncertainty. (Bauer
1967). The other author examined that the customers used to evaluate the product and pondering
the overall relevant information and weightage the product before going to make purchasing
decision. (Cox 1996).

In 1967 Coz given the theory of perceived risk as combination of two factors, in which
consumers can identify risk related with product before making decision. They would get idea in
overall analysis regarding product, this was all done through two factors that was vagueness and
comparative consequences. (Sinha, 2010). The researchers have proposed theories related with
risk that includes product category and product specific risk. As per the opinion of these above
researchers, that integral or risk related with product found out that the consumers’ views related
with risk regarded with specific risk and on other part risk is directly or indirectly involved with
product that is offered in the market. (Sylke et,al 2007).

The another examiner, he has defined that the at present there is no any concept of independent
risk and further submitted that by measuring a specific variable with known threat is based on the
prepositions and judgment of individuals. Therefore, the risk is mused on the basis of
individuals’ consequences in regard with the decisions which are taking by the customers when
going to purchase the product. (Paul Slovic 1992).

2.4.1 Protection Motivation Theory

There are several theories which are defining the perceive risk and level of bearing risk and this
theory which is mentioned above is one of the most important in defining the risk. As per this
theory, people often avoid from those things which they perceive as negative and try to save
themselves from unusual consequences which are threatening them and they think that they have
ability to take necessary measures to avoid from risks. The authors defined that this theory has
some linkages with the health acceptance model. (Becker & Maiman, 1975), mostly people

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taking risk on their basis of their ability and try to examine the severity of threat which is
prevailing around them and according to severity of threat they take possible actions to reduce it
and reach at the conclusion that either they will take risk or not.

The protection motivation theory suggests that there is correlation between perceive risk and
damages, happenings, and people being motivated by taking defensive measures. The another
researcher explored that there are some essentials of risk as perceive risk and perceive strictness
has a combine optimistic effect on shifting purposes and performance towards security.

2.4.2 Risk Compensation/Risk Homeostasis Theory

This theory related with compensation defined that what are the reasons that trigger individual to
takes risks. The people when considers that there is a great safety in the product then they tend to
accept more risk for the sake of safety measures. In simple terms, we can say that, people taking
risks while they ponder that they will get benefit or save themselves from unusual occurring
events. (Wilde 1994).

2.4.3 Situated Rationality Theory

According to this theory, the researchers were trying to prove that, it is defective to assume that
the secure behaviors are balanced and insecure behaviors are certainly unreasonable. We can say
in other terms that, it is illogical to assume that risk-taker behavior is unwise than it is relevant to
have reasonable explanation for why people select to take risks. In this juncture, the people take
to stretch out outside and questioning the barbers even with recovering from the risk of cancer in
order to surge their body image. (Cafri et al., 2009).

2.4.4 Social Action Theory

Basically, this theory related with social action but when theory applied in risk situation then it
stated that individuals mostly accept risks because of social pressure from their friends and
society as a whole. When in society every people is going to take risk with regard to any product
then individual unwillingly engaging into take risks and also society considered risk as positive.
The main concept of the theory associated with high risk that will encourage individuals to take
risk.

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The trend of risk is mostly affected by fellow workers who are predicting the risks to avoid from
losses in the future. The mostly people copying the benchmarks of other groups to avoid from
permissions and start to recognize those groups which are related with their behaviors and also
accept the norms of those groups. (Cooper, 2003; Harding & Eister 1984).

The people have optimistic findings when the community and particular group developed the
positive culture of security and protection. For example, the people while working with their
fellow workers create positive attitudes when they meeting with them and have a word with them
this all will create positive perception towards safety and they doing their work with the sense of
security. (Mullen, 2004).

2.5 Theories of buying behavior

2.5.1 Theory of reasoned action (TRA)

Basically, this theory was designed to examine and predict the purchasing behavior of consumers
in 1960 by Martin Fishbein. It is also explaining the behavioral objective that is linked with the
approval of performing particular type of behavior while remaining under certain situation and is
eventually determined by behavioral attitude and individual norms. This theory is also in the
field and explaining the behavioral intentions of consumers. (Zhang, Tian, & Xiao, 2014).

2.5.2 Theory of planned behavior (TPB)

Initially, the theory was came into being after theory of reasoned action in order to making
addition of two more hypothesis in the model of attitude towards behavior and defined as there is
a social pressure to perform or not to perform and there is a perceived control system which
defines as flexibility or complexity regarding in regard to particular behavior of interest. (Ajzen
(1991).

The both researchers combined investigate that people’s attitude towards the buying behavior
and related with personal customs is to be pondered a volitional behavior. (Ajzen and Fishbein
1980). The people in the world, always reacts towards particular situation on the basis of their
personal philosophies which take them to particular results and on the basis of their evaluation
towards the outcomes, either positive or negative (Shis 2004).

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2.6 Consumer Buying Behavior

The different authors and researchers shared their diverse opinions related buying behavior of
consumers in different areas, the researches which was conducted previously submitted same
features which are developing constantly over the time period. Nevertheless, the behavior of
consumers is restricted to precise period of time, services, products or groups. There are rare
products which got market share in certain geographical area or region which is made according
to customer needs and wants.

The behavior of consumers defined that how persons are purchasing products in particular time
period. Most of the marketers have emphasis on customers’ needs and activities and according to
needs of consumers they design the marketing activities. For the marketers it is important to
analyze the situations in which consumers’ buying behavior is being preferred. The mostly
marketers examine the decisions of consumers which are related with (how, why, what, when
and often) that consumers considers over period of time. (Hoyer 2004). To understand the
consumers’ needs accurately, the marketers always identify the ways in which customers take
action towards different categories of products such as advertisement, price of product and
features, to create competitive advantage in the market and capture the market share.

In modern era of marketing and globalization every customer is very conscious regarding
buying any product or service in their field of interest , and companies are also giving priorities
to their behavior regarding purchasing and choosing their products or services. Behaviors vary
time by time and develop the mentality on the basis of thinking level. The customers purchase
those products which are existing in their unconscious minds and they often do not know what
are reasons, that affecting their purchasing decisions and authors suggested that the emotions and
learning process trigger the consumers 95% towards purchasing the particular product and that is
present in their insensible mind without their awareness. (Armstrong et al., 2005).

Mostly the people are very conscious to knowing their needs and wants toward insurance
policies based on several factors their behavior is selecting multiple typed of products and
services based on several factors which are related with cultural and national as well as industrial
over the time period.(Choudruri, 2014).

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Life Insurance Companies are also analyzing and involving customers to their segments so, that
they can fulfillment their needs and requirements by selecting life insurance products. If the
companies are offering feasibility in their products and services ultimately the competency will
be increased and become challenge for a firm to set strategies for further offerings, (Rao 2014).

Recognition of a particular need or problem based on situation and environments that are
connected with the customers’ special and proficient career and in this regard the findings which
are creating ideas toward purchasing. For suppose, if a customer is interested toward particular
product when there is need to carry it is more convenient compare to other products. (Neal &
Quester, 2016).

The human needs are categorized into dissimilar on the basis of their nature. The Psychological
and Functional needs are defined here. The researchers submitted that the emotional feelings of
customers related with psychological needs while necessity needs are related with physical needs
of the consumers. (Solomon et al., 2006).

The researchers and marketers who have conducted a lot of study on the areas of consumer
buying behavior and same are being carried by the companies till now. The authors have
expressed their different views connected with consumers’ buying behavior to examine that why
consumer buying behavior is the important topic for today’s marketers and giant companies.
Generally, the opinions of researchers suggested that to understand the buying of consumers has
great impact on the overall performance of firms. (Kotler & Keller, 2012).

The other authors have added that, it is very important for marketers to have knowledge about
the consumer buying behavior in order to compete in the market and have sustainable
competitive advantage because there is lot of vicious competition in all over the world.
(Lancaster et al, 2002). This part will further explore the topic of consumer buying behavior and
give a comprehensive view on the works of authors and marketers. Moreover, they have further
discussed that there are five stages of consumers decision making from which the consumers
passes when they are going to purchase any product.

The blow mentioned authors have submitted that the, to create positive attitude of consumers
towards insurance products is very important to get success while providing insurance services
and also develop an insurance culture that supporting the insurance companies to satisfy the
needs of customers. The demographic analysis is very important for any company to analyze and

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determine the demand for the product. Nevertheless, due to new products and continuously
changing in the favorites of people to prevent from the risks make it complex to purchase
financial products. (Negi & Singh 2012).

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 3.0 METHODOLOGY

The methodology chapter defines the overall strategy that we have adopted in our research study.
The methodology part includes following sub-parts i.e. Research Design and Procedure, Primary
and Secondary sources, Population, Sample size and Sampling Method, Measurement and
Selection of instrument, Variable, Hypothesis and Data analysis as well as Research schedule is
listed in the chapter.

3.1 Research Design

This research study has causal in nature of design, which comprises of primary and secondary
sources and it also includes surveys to conduct research. The main objective of casual research is
to provide explanations about the affairs of state that are present in insurance sector. It is also
quantitative in form which used to measure survey method in form of questionnaire where data is
gathered. The philosophy of research is based upon post positivist approach because we are
using operational tools to quantify the results and it checks causal relationship among the
variables. The casual research defines the correlation between two variables in order to examine
their relationship. In this study we have to find out the relationship between perceived risk and
buying behavior of consumers.

This is a quantitative research in which will find the casual relationship among independent
variables with the dependent variable. The period of time for this study is based on randomly
selection because this research is conducted for definite period of time and we are checking the
causal relationship so that’s why we are using deductive approach in this paper and accordingly
the hypothesis has been developed. In addition, we have used statistical tools for measuring the
results that includes the Regression and Correlation Analysis for getting desired and possible
results. The research study of this paper is explanatory as some variables related with buying
behavior have been established to build up their relationship which is linked with buying
behavior of life insurance products, has been described. The data collection method is mono
method in this research because it is a quantitative in nature. We have conducted the survey
which consisted questions related to variables. The primary data has been collected from targeted
sample.In order to collect large amount of information from a huge sample size, questionnaire is
considered most suitable tool Saunders et al., (2009); Zikmund, (2003).

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3.2 Research Procedure

It has been taken from existing literature, journals and found that there are main variables which
are affecting the consumers buying behavior while purchasing the life insurance products and
then we developed the independent and dependent variables for this research study and the
operationalization brought to examine and measure the above variables. On the basis of existing
literature the hypothesis and operational framework has been developed. The questionnaire has
been used in which all the questions are listed related with perceived risk and buying behavior to
collect the data from the targeted sample.

After this, we moved to next step to accumulate the primary data, for collection of data the
questionnaire was used that was the close-ended survey questionnaire to measure the buying
behavior of life insurance products with the independent variable i.e. perceived risks. After
conducting the analysis, the correlation between independent variable and dependent variable
was explained and corresponded with overall findings and results of this research study. In this
study the five point likert scale was used to quantify the results of the study which comprises the
questions related with the variables i.e. Demographics, Buying Behavior, Financial Risk, Social
Risk and Time Risk.

The results of questionnaire which was collected and analyzed through statistical tools explained
in order to reach at the conclusion. Based on the findings and results, the conclusion was written
along with recommendations and future suggestions.

3.3 Source of data collection

This study has used a mixture of primary and secondary data with first hand data dominating.
The primary data for the study is the responses collected from the 338 students of universities of
Larkana who are directly or indirectly involved in buying life insurance products.
The secondary data consist of information from text books, internet, journals and previous
studies which described that there was a negative correlation between perceived risk and buying
behavior when customers are going to make decision. The reason behind collecting secondary
data is to completely understand the scenario and to analyze the different variables and then
finally develop hypothesis. Secondary data also helps to provide information on previous studies
those are relevant to this study.

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3.4 Population

Population characteristics can be studied with the help of either a sample or a census. A census
study considers a whole population and on the other hand a sample shows or represents a
subgroup of the population. By considering the scope and time limitations, it’s not possible as
well necessary to study the entire population. Therefore, the overall population for this study is
2800.The population for this study comprises university students of Larkana Region. There are
three universities in the Larkana (1) SZABIST (2) SMBBU Larkana (3) QUEST Larkana.

3.5 Sample Size

According to 5% margin of error from the population 2800, which was calculated through online
internet scientific calculator and it was finalized that the sample size is 338 in order to get the
approximate results. The 338 sample size was divided among 3 three universities, as 138 from
SZABIST, 100 from SMBBU and 100 from QUEST. From each university students has
purposively been contacted to fill up questionnaire. Total 338 questionnaire was get filled by the
respondents. Due short period of time and resources, the limited sample size was selected for this
study.

3.6 Sampling Method

It is one of the very important elements of research design when it is impossible to conduct
census study. In this study we used non-probability sampling technique to select the 338 students
of universities of Larkana. After going through the previous studies and considering the nature of
research, Stratified and then convenience sampling technique is used in order to ensure the
representation of all three universities. According to Stratified technique the population was
divided into different groups and then sample size could be chosen from these strata by using any
other sampling technique. Ume-Sakran, 4th Edition, John Willey & Sons, Inc., year 2003,
(Chapter 11, page 277).

3.7 Instrumental Selection

In this research the both aspects were used in collecting the data i.e. secondary source from
which we extract the data from published journals, books, internet and related articles. The
primary source was questionnaire in which we listed multiple questions related with topic to get

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appropriate results. The existing literature provided support to the great extent in finding out the
research gaps and also helps to develop the theoretical framework and considering the main
variables which have significant influence related with insurance. Further, the hypothesis was
developed by keeping in mind the previous literature. The primary source based upon
questionnaire in which the different questions were asked related to the variables which are
included in this study. The targeted population was selected including three universities of
Larkana Region. Furthermore, the results and findings have been explained in data analysis
section.

3.8 Data Analysis

The data was collected through questionnaire, it was analyzed through Regression and
Correlation along with confidential envelop, questionnaire has been distributed to respondents in
order to maintain the confidentiality of respondents. To check the validity and reliability we have
used SPSS software to ensure the questionnaire either reliable or not and investigate the
Regression and Correlation between independent variables and dependent variable to find impact
and relationship among variables.

3.9 Variables

The variables of buying behavior of life insurance products have been found while studying the
secondary data. The major thing we found that there was negative relationship between
perceived risk and buying behavior of life insurance products. This means, the perceived risk
increases the buying behavior decreases.

Dependent variable is (Buying Behavior of Life Insurance Products)

Independent variables are (financial, social and time risk)

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3.10 Theoretical Framework

Financial Risk

Social Risk Consumer Buying

Behavior
Time Risk

Zhou, L., Dai, L., & Zhang, D. (2007). Online Shopping Acceptance Model. (j. O. Research, ed.) A
Critical Survey of Consumer Factors in Online Shopping, vol 8.

3.11 Hypothesis

(Regression Analysis)

H1: There is negative impact of perceived risk factors i.e. financial, social and time risk on
consumer buying behavior.

(Correlation Analysis)

H1: There is negative relationship between perceived risk factors i.e. financial, social and time
risk and consumer buying behavior.

3.12 Research Schedule

S.No. Task Name Starting Ending Duration

1 Proposal 20th: October, 2016 9th: November, 2016 19 Days
2 Literature Review 10th: November 5th: December 25 Days
3 Primary Data Collection 20th: November 5th: December 15 Days
4 Data Interpretation 21st: November 8th: December 17 Days
5 Findings and Conclusion 1st: December 8th: December 7 Days
6 Report Submission 10th: December 10th: December Nil

3.13 Software Applied

In this study, the software named as SPSS 17.0 version is used to find out the results.

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 4.0 DATA ANALYSIS AND INTERPRETATION

4.1 Frequency Analysis:

In this chapter, we came to know the complete profile of the respondents, and based on that point
we have got the idea that, which demographic group is more influential on results.

Male/female respondents
Frequency Percent Valid Cumulative
Percent Percent
Valid Male 151 44.7 44.7 44.7
Female 187 55.3 55.3 100.0
Total 338 100.0 100.0

Gender
Male Female

45%

55%

Interpretation:In this study males are 44.07% of total sample size and remaining 55.3% are
females, there is high female ratio, which influenced the overall results.

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 Age of Respondents

Cumulative
Frequency Percent Valid Percent Percent

Valid 18-25 314 92.9 92.9 92.9

26-35 24 7.1 7.1 100.0

Total 100.0

Interpretation: The respondents of this study are divided into three age groups. As our population of
study is university students, so that’s why the age group of 18-25 is more influential on the results;
and they are 92.9% of the sample size. As we know that mostly students are more concerned about
their future, so they are always trying to earn some money and have a secure future, we can say that
mostly students in this age are purchasing the different insurance policies to secure their lives as
well as future.

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 Age
18-25 26-35

7%

93%

Education of Respondents

Cumulative
Frequency Percent Valid Percent Percent

Valid Graduate 218 64.5 64.5 64.5

Masters 107 31.7 31.7 96.2

Above 13 3.8 3.8 100.0

Masters

Total 338 100.0 100.0

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 Education
Graduate Masters Above Master

4%

32%

64%

Interpretation: The majority of respondents are graduate i.e 64.5%, the respondents who have master
degree holders are 31.7% and remaining are above masters.

Residence of respondents

Cumulative
Frequency Percent Valid Percent Percent

Valid City 299 88.5 88.5 88.5

District 39 11.5 11.5 100.0

Total 338 100.0 100.0

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 Residence
City District

12%

88%

Interpretation: The mostly respondents are resident of City i.e 88.5% and remaining respondents
are residing in different areas of District Larkano.

Descriptive Statistics

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation

Buyingbehavior 338 2.00 3.40 3.0349 .48168

Financialrisk 338 1.00 3.00 1.8314 .68772
Socialrisk 338 1.00 3.00 1.8314 .68772
Timerisk 338 1.00 5.00 1.8462 .71025
Valid N (listwise) 338

Interpretation: The mean values of all three variables are less than 3, where 1=SA, 2=A, 3=N,
4=D, 5=SD. Based on results of average, we are of the opinion that, the respondents were more
on the strongly agree side. The standard deviation shows the variance in the data. According to
the above results there is high variation in time risk and smallest variation in financial risk and

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social risk as compare to time risk, this showing that both variablesare the main source of
negative consumer buying behavior towards insurance products.

4.2 Reliability Statistics

Table:-4.2

Reliability Statistics

Cronbach’s Alpha N of Items

.792 14

Financial Risk

.840 3

Social Risk

.660 3

Time Risk

.783 3

Interpretation: Reliability statistics shows that whether questionnaire is reliable or not based on
questions asked from respondents. The 60% cronbach’s alpha is considered to be poor therefore;
our cronbach’s alpha has been shown in above table as 0.792 that is above 70% means our
sample questionnaire is reliable and valid.

4.3 Regression Model Summary

Table:-4.3

Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .389a .152 .144 .44567

a. Predictors: (Constant), time risk, financial risk, social risk

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Interpretation: The table 4.3 represents model summary. The value of Adjusted R-square is .144
multiplied to 100 means 14.4 which is less than 0.6 as recommended for the good fit model.
When we compare the model with its complexity we use Adjusted R-square. So, for this study
the research model which is used is not as much as good for this study. This value shows the
variance (100-14.4=85.6) between dependent variable consumer buying behavior and
independent variables such financial risk, social risk and time risk. The R square value reveals
that the predictors account for only 15.2% which means all the independent variables collectively
give 15.2% contribution in the dependent variable. There are other variables which make
variance in research model. This model is not good fit model for this research but not for all of
the researches.

4.4 Regression ANOVA Table

Table:-4.4

ANOVAb
Models Sum of Df Mean Square F Sig.
Squares
1 Regression 11.849 3 3.950 19.886 .000a
Residual 66.339 334 .199
Total 78.188 337
a. Predictors: (Constant), time risk, financial risk, social risk
b. Dependent Variable: buying behavior

Interpretation: The table 4.4 shows that p-value which is .000, which indicates that overall this
study model is significant. If the model is not significant then there is no need for further
explanation, and we simply conclude that all these variables are not explaining the dependent
variable.

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4.5 Regression Model Summary of Standardized Coefficients
Table:-4.5

Coefficientsa

Model Unstandardized Standardized

Coefficients Coefficients

B Std. Error Beta T Sig.

1 (Constant) 3.532 .069 50.877 .000

Financial risk -.236 .159 -.337 -1.490 .137

Social risk -.155 .218 -.221 -.709 .479
Time risk .118 .149 .174 .792 .429
a. Dependent Variable: buying behavior

Interpretation: First of all it is desired that all the coefficients of variables (excluding constant) should be
significant. The beta value of financial risk is negative -0.236 which means that financial risk has
negative impact on consumer buying behavior and t value is also less than 2 (t=-1.490<2). The
beta value of social risk is negative -0.155 which means that social risk has negative impact on
consumer buying behavior and t value is also less than 2 (t=-0.709<2). The beta value of time
risk is positive 0.118 which means that time risk has negative impact on consumer buying
behavior and t value is also greater than 2 (t=0.792>2). We conclude that the time risk is more
influencer as compared to financial risk and social risk because he has higher coefficient value
than two other independent variables.

4.6 Hypothesis Summary (Regression Analysis)

Hypothesis justification perceived risk factors H1 Rejected

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4.7Pearson Correlation
Table:-4.7

Correlation

Buying Financial Social Time

behavior risk risk risk
Buying Pearson Correlation 1 -.387** -.380** -.361**
behavior Sig. (2-tailed) .000 .000 .000
N 338 338 338 338
Financial risk Pearson Correlation -.387** 1 .975** .949**
Sig. (2-tailed) .000 .000 .000
N 338 338 338 338
Social risk Pearson Correlation -.380** .975** 1 .973**
Sig. (2-tailed) .000 .000 .000
N 338 338 338 338
Time risk Pearson Correlation -.361** .949** .973** 1
Sig. (2-tailed) .000 .000 .000
N 338 338 338 338

Interpretation: The financial risk and consumer buying behavior is negatively correlated with each
other(-0.387, p=.000)i.e. if financial risk increases, the consumer buying behavior decreases by
38.7%. The social risk and consumer buying behavior is also negatively correlated with each
other(-0.380, p=.000)i.e if social risk increases, the consumer buying behavior decreases by
38.0%.The time risk and consumer buying behavior is also negatively correlated with each
other(-0.361, p=.000) i.e. if time risk increases, the consumer buying behavior decreases by
36.1%.

4.8 Hypothesis Summary

Hypothesis justification perceived risk factors H1 Rejected

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4.9 Findings/Results

Nowadays, insurance has become need of everyone which secures our lives from any mishap and
provides benefits at any time to our family. The major risks involved in buying the insurance
products i.e Financial Risk, Social Risk and Time Risk which have directly or indirectly impact
on consumer buying behavior when they are going to buy the insurance policy.
 The Cronbach’s Alpha value is 0.792, which is above 60% it means our questionnaire is
reliable and has internal consistency as well.
 The profile of respondents shows that the most respondents are female with 55% and the
respondents who are lie in the age group of 18-22 with the 92%, most of the respondents
are students of different universities.
 The value of Adjusted R-square is .144, it shows that the model is not as better good fit
model for the study as it is recommended that value of R-square should be greater than
0.6 for the model fit and shows that model is fit up to 14.4%.
 There is negative impact of perceived risk factors on consumer buying behavior, hence
H1 hypothesis is rejected.
 The correlation between financial risk and consumer buying behavior is negative at -
0.387 which means there is a negative correlation between financial risk and consumer
buying behavior. The correlation between social risk and consumer buying behavior is
also negative at -0.380 which means there is a negative correlation between social risk
and consumer buying behavior. The correlation between time risk and consumer buying
behavior is negative at -0.361 which means there is a negative correlation between time
risk and consumer buying behavior. These results show that the consumers have
considered thet hree risks as major factor to buy insurance policy.
 The descriptive statistics shows that there is smallest variation in financial risk and social
risk and there is highest variation in time risk which means the financial and social risk
are more influencing the negative buying behavior.

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 5.0 CONCLUSION, RECOMMENDATIONS
& FUTURE RESEARCH DIRECTION

5.1 Conclusion

The results have shown that by decreasing the amount of risk, the willingness to buy increases.
Insurance is intangible service compound, intensive on unsure future benefits. Because of
uncertainty and ambiguity of the life insurance product, consumers are less likely to respond
according to their income level, cultural difference, social dominance and time constraints. Our
research findings show that respondents indeed have a negative effect on life insurance buying
behavior. The results are robust however; the relationship between perceived risks and life
insurance buying behavior is negative.

The consumers before buying insurance policy they consider the financial risk because this is
one of the major factors in purchasing insurance and they have apprehension of loss of money.
Coming to social risk, it is also key factor in buying insurance policy as in some cultures just like
in Pakistan most of consumers faced with culture differences and they have negative perception
regarding insurance because of their values and norms. In the last, time risk is also considered as
a main factor in buying life insurance products because some of people think that it takes too
much time to get return. Due to these factors people have negative perception about insurance
and this will reduce consumer buying behavior towards insurance.

5.2 Recommendations

Based on the major findings and the conclusion, certain measures are recommended those can
help insurance companies to increase consumer buying behavior and also to increase the
immediate sales. The following suggestions should be taken into the considerations:

It is recommended that insurance companies explain their customers what problems will be
prevented in the future in return of the cost paid for the purchase of life insurance, and what
concessions insurance will have for the customers to ensure them that the cost is justified,
thereby encouraging the customers to purchase.

It is recommended that insurance companies must collaborate with each other to create insurance
awareness in Larkana to reduce the negative perception about insurance and also reduce the
cultural ambiguities in order to regain their confidence of their customers.

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It is recommended that they must have effective strategies to deal with customers on timely basis
and make sure them that they will get healthy return on time.

Therefore, it is suggested that insurance companies respond to customers’ queries patiently, by

presenting brochures containing details, conditions, price, and life insurance benefits, and also by
mentioning these points in life insurance contracts reduce uncertainty of customers about the
insurance so that they can easily purchase the insurance products.

5.3 Future Research Direction

The scope of this study was limited to the university students of Larkana Region, but the scope
can broaden to further expand the generalization of study on the country level. The Sample size
can be increased to strengthen the validity and reliability of results because the more sample size
the more chances of getting accurate results.
Future researchers must get the list of elements of population, so that author can conduct the
research on the stratified and then random sampling basis.
In our research we have considered three risks financial, social and time. The researcher can take
more than 3 risks i.e. physical risk, safety risk and income level to know that how consumers
react towards insurance products and in this study the model is not fit because we have not
included some variables which are also influencing the buying behavior, so the researcher who
wants conduct research on this topic must include other risks to get the appropriate results.

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 6.0 References

Aspara, J., Tikkanen, H. (2011): Individuals’ Affect-based Motivations to invest in Stocks:

Beyond Expected Financial returns and risks, Journal of Behavioral Finance 12: 78-89

Aurelija &Ulbinaitė”, Marija Kučinskienė Vilnius University, Lithuania (INSURANCE

SERVICE PURCHASE DECISION-MAKING RATIONALE: EXPERT-BASED EVIDENCE) Life
insurance industry”, journal of financial services marketing 8(4),314-326.

Ashfaque Ahmed (2013) Perception of life insurance policies in rural Areas, Kuwait Chapter of
Arabian Journal of Business and Management Review Vol. 2, No.6.

Bauer, R. A. Consumer behavior as risk-taking. In R. S. Hancock (Ed.), Dynamic marketing for a

changing world. Chicago: American Marketing Association, 1960. Pp. 389-398. Cited from D.
F. Cox (Ed.), Risk-taking and information-handling in consumer behavior. Boston: Harvard
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APPENDIX-A

SURVEY QUESTIONNAIRE

Dear respondent,

Thisquestionnaireisaimedatunderstandingyourperceptionabout PrivateLifeInsuranceCompanies
ofLarkana Region.Your responsewillbedealtwithstrictconfidentialityanditwillbeusedonlyfor
academic purpose.This questionnaire is based on 5 point Likert Scale:

a) Strongly Agree b) Agree c) Neutral d) Disagree e) Strongly Disagree

(A) Demographics

Gender: a) Male b) Female

Age a) 18-25 b) 26-35 c) Above 35
Qualification a) Graduate b) Masters c) Above Masters
Residence a) City b) District c) Division

S# Question SA A N D SD
B BUYING BEHAVIOR
1 I buy insurance as I can avoid from losses.

2 I buy insurance because it provides security to my

family.

3 I buy insurance policy because I feel more protected.

4 I buy insurance policy as I can get healthy return in

future.

5 Buying of Life insurance policy if the best form of

Long Term investment
C FINANCIAL RISK
6 I feel apprehension while buying an insurance policy
that I will lose the money.

7 I might get less return on investment.

8 I feel that my financial information given to the

insurance companies may be compromised to 3rd

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 party.

D SOCIAL RISK
9 There is a religious difference in buying insurance.

10 Buying insurance can be criticized by the society

due to cultural difference.

11 Social groups appreciate/refer me to buy insurance

policy.

E TIME RISK
12 I feel that I may not get return on time.

13 I do not buy insurance because of length of time.

14 It might be time taking for claiming an insurance

policy.

Thank you for spending your valuable time to fill 

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APPENDIX-B

PLAGIARISM REPORT

Thesis
ORIGINALITY REPORT

5 %
SIMILARITY INDEX
4% 2%
INTERNET SOURCES PUBLICATIONS
4%
STUDENT PAPERS

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 Table of Contents
1.0 Introduction ............................................................................................................................. 1
1.1 Preamble ............................................................................................................................................. 1
1.2 Research Background ......................................................................................................................... 4
1.3 History of Insurance in Pakistan ......................................................................................................... 6
1.4 Private insurance companies in Pakistan ............................................................................................ 7
1.5Insurance Products ............................................................................................................................... 8
1.5.1 Life Insurance .............................................................................................................................. 8
1.5.2 Health Insurance .......................................................................................................................... 9
1.5.3 Auto and Long term Disability .................................................................................................... 9
1.6 Research Objectives .......................................................................................................................... 10
1.7 Problem Statement ............................................................................................................................ 10
1.8 Research Questions ........................................................................................................................... 11
1.9Research Scope/Limitations ............................................................................................................... 11
1.10 Justification ..................................................................................................................................... 11
1.11 Assumptions.................................................................................................................................... 11
1.12 Research Gap .................................................................................................................................. 12
1.13Beneficiaries .................................................................................................................................... 12
1.14Definition of Key terms ............................................................................................................ 12
1.14.1 Perceived Risk: ........................................................................................................................ 12
1.14.2 Financial Risk: ......................................................................................................................... 12
1.14.3 Time Risk: ................................................................................................................................ 12
1.14.4 Social Risk: .............................................................................................................................. 13
1.14.5 Purchasing Behavior: ............................................................................................................... 13
2.0 Literature Review ................................................................................................................. 14
2.1 Perceived risk .................................................................................................................................... 14
2.2 Risk Dimensions ............................................................................................................................... 15
2.2.1 Financial Risk ............................................................................................................................ 16
2.2.2 Social Risk ................................................................................................................................. 16
2.2.3 Time Risk ................................................................................................................................... 17

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 2.3 Factors/Elements of Perceived Risk ................................................................................................. 17
2.4 Theories related to perceived risk ..................................................................................................... 18
2.4.1 Protection Motivation Theory .................................................................................................... 18
2.4.2 Risk Compensation/Risk Homeostasis Theory .......................................................................... 19
2.4.3 Situated Rationality Theory ....................................................................................................... 19
2.4.4 Social Action Theory ................................................................................................................. 19
2.5 Theories of buying behavior ............................................................................................................. 20
2.5.1 Theory of reasoned action (TRA) .............................................................................................. 20
2.5.2 Theory of planned behavior (TPB) ............................................................................................ 20
2.6 Consumer Buying Behavior .............................................................................................................. 21
3.0 METHODOLOGY ............................................................................................................... 24
3.1 Research Design................................................................................................................................ 24
3.2 Research Procedure ........................................................................................................................... 25
3.3 Source of data collection ................................................................................................................... 25
3.4 Population ......................................................................................................................................... 26
3.5 Sample Size....................................................................................................................................... 26
3.6 Sampling Method .............................................................................................................................. 26
3.7 Instrumental Selection ...................................................................................................................... 26
3.8 Data Analysis .................................................................................................................................... 27
3.9 Variables ........................................................................................................................................... 27
3.10 Theoretical Framework ................................................................................................................... 28
3.11 Hypothesis....................................................................................................................................... 28
3.12 Research Schedule .......................................................................................................................... 28
3.13 Software Applied............................................................................................................................. 28
4.0 DATA ANALYSIS AND INTERPRETATION ................................................................. 29
4.1 Frequency Analysis:.......................................................................................................................... 29
4.2 Reliability Statistics .......................................................................................................................... 34
4.3 Regression Model Summary ............................................................................................................. 34
4.4 Regression ANOVA Table ............................................................................................................... 35
4.5 Regression Model Summary of Standardized Coefficients .............................................................. 36
4.6 Hypothesis Summary (Regression Analysis) .................................................................................... 36
4.7Pearson Correlation ............................................................................................................................ 37

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 4.8 Hypothesis Summary ........................................................................................................................ 37
4.9 Findings/Results................................................................................................................................ 38
5.0 CONCLUSION, RECOMMENDATIONS......................................................................... 39
& FUTURE RESEARCH DIRECTION .................................................................................. 39
5.1 Conclusion ........................................................................................................................................ 39
5.2 Recommendations ............................................................................................................................. 39
5.3 Future Research Direction ................................................................................................................ 40
6.0 References .............................................................................................................................. 41
APPENDIX-A .............................................................................................................................. 45
APPENDIX-B .............................................................................................................................. 47

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