International Journal of Business and Technopreneurship Volume 7, No. 2, June 2017 [117-134] The Relationship of Life Insurance Ownership with Demographic and Psychographic Factors: A Preliminary Study in Alor Setar, Kedah Tan Suang Sin 1 and Lim Chee Chee 2 ABSTRACT The life insurance market in Malaysia still remains widely untapped as compared to other countries that have much higher market penetration rates. Therefore this study aims to examine the relationship of life insurance ownership with demographic and psychographic factors, and to identify which of them have a more important relationship with life insurance ownership. A preliminary field work has been carried out in early February to mid-March 2015 using a non-probability convenience sampling technique around Alor Setar, Kedah in Malaysia. A total of 108 respondents participated in this study. Binary logistic regression has been used for data analysis. The major findings show that demographic factors can better explain life insurance ownership among the respondents in Alor Setar relative to psychographic factors. Two demographic factors, namely ethnicity and income, are found to be the predominant factors of life insurance ownership. Life insurance policyholders in Alor Setar tend to be Chinese and those at higher income level. Meanwhile, the psychographic factor of risk attitudes only has a weak negative relationship with life insurance ownership. Risk attitudes are only found to have a significant relationship with life insurance ownership when demographic factors are excluded. Non-policyholders in Alor Setar tend to be individuals who are very likely to engage in risky behaviours or activities. They are risk takers, unlike risk adverse individuals who are more likely to own life insurance for assured protection against personal risks of premature death. Keywords: Binary logistic regression, ethnicity, demographic factor, income, life insurance, psychographic factor, risk attitude. 1. INTRODUCTION In an uncertain world with the constant increase of living costs, life insurance has become more important in providing both savings and protection to the policyholders and their beneficiaries. Life insurance plays a vital role in alleviating unforeseen financial stress due to adverse events (e.g. the premature death of primary wage earner). However, the ownership of life insurance in 1 School of Economics, Finance and Banking, UUM College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia. Email: tan_suang_sin@hotmail.my 2 School of Economics, Finance and Banking, UUM College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia. Email: cclim@uum.edu.my