Consumers’ Insurance Literacy: Literature Review, Conceptual Definition, and Approach for a Measurement Instrument

Abstract

Improved financial literacy is the key to informed decisions, protected consumers, financial independence, and peace of mind. Foremost literature reveals that while financial literacy required more special education to improve insurance literacy, the literature of consumers’ insurance literacy is quite low. Defining and appropriately measuring insurance literacy is essential to understand the educational impact as well as barriers to better utilization of insurance products. Thus, we conducted a systematic literature review using PRISMA guidelines and analyzed 37 studies focusing on the construct validation criteria. This study developed a conceptual definition with an approach for a measurement instrument to address the current limitations in establishing a standardized measure of consumers’ insurance literacy. We identified six knowledge dimensions and skill dimensions to be incorporated into an instrument developed to measure the insurance literacy construct. The study contributes to both insurance and financial literacy, and provide a foundation for further research into consumers’ insurance literacy.

Keywords: Consumers’ Insurance Literacy, Insurance literacy measure, Insurance Knowledge, insurance education, Financial Literacy, Insurance

DOI: 10.7176/EJBM/11-26-05

Publication date:September 30^th 2019