Impact of Financial Behaviour on Life Insurance Using Radial Basis Function Modelling

Abstract

A literature survey showed very few papers on the financial behaviour of Saudi Arabian people and its impact on their acquisition or maintenance of life insurance products. The reasons might be their attitudes, counter-intuitive behaviour, and social and religious factors. Their positive attitude and financial behaviour on Islamic insurance products like the Takaful may demonstrate this. This paper aims to examine the impact of the financial behaviour of Saudi customers on life insurance. A survey of 150 Saudi customers of a bank in Riyadh was used to analyse the response frequencies and identify predictive variables using the Radial Basis Function modelling approach. The results showed that the majority of trends in financial behaviour were comparison shopping, timely paying all bills, spending within budget or plan, paying off their credit card balances and maxing out the limits of their credit card/s, saving from every paycheck, saving for emergencies and long-term needs and contributing to retirement accounts. Most participants maintained or purchased adequate health insurance, property insurance and life insurance. However, the Radial Basis Function analysis did not lead to any prediction variable for Saudi citizens’ insurance product purchase intentions, indicating other factors might be at play. The limited literature available and reviewed above did not deal with the aspects studied in this research. They mostly dealt with factors influencing decision-making by Takaful insurance customers. The generally positive trends in awareness about various insurance products and knowledge about their utility generally support the trends of this research findings.