Awareness of Microtakaful Development among Low-Income Earners in Malaysia

Abstract

Malaysia is the third largest takaful market globally and the takaful sector in Malaysia shows sound growth in 2022. Takaful had a penetration rate of 20.1% in 2022, up from 18.6% the previous year. However, only 25% of adult employees in the low-income group have some form of life insurance or family takaful cover, in contrast with 59% of those who are employed in the overall population who have takaful or insurance protection. The Malaysian population can be classified into three income segments: the T20 group, the M40 group and the B40 group. This study will only focus on the B40 group with a median income of RM3,860. Microtakaful is a kind of takaful product entailed for addressing the financial needs of households with low incomes in times of significant expenses. The main objective of this study was to examine the factors influencing the awareness of microtakaful development among the low-income group (B40). This study examines the relationship between (i) income level (ii) knowledge, and (iii) loss of exposure to the awareness of microtakaful. Data was collected by distributing 320 questionnaires to the residents in (PPR) Kerinchi Lembah Pantai, Kuala Lumpur. Based on the findings, it can be concluded that the three independent variables, namely income level, knowledge, and loss exposures, have a strong positive relationship with microtakaful awareness. However, it is found that income level has the biggest impact on the awareness of microtakaful.