BUYING FACTORS OF LIFE INSURANCE POLICIES IN BANGLADESH

What is it about?

This paper attempts to identify the factors responsible for buying life insurance policies by the people of Bangladesh. The purpose of the paper could be attributed by the very low per capita life insurance policy, which is lower in compared to other developing countries of the world.

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Why is it important?

Life insurance business in Bangladesh is very small compared to its economy. The average annual revenue generated by life insurance constitutes only 0.23% of the gross domestic product (GDP) of Bangladesh. At present, there are 18 private life insurance companies operating in Bangladesh. Only one company named Jibon Bima Corporation is operating in public sector and others are in private sector. Both private and public arrangements are simply inadequate to provide life insurance services to about 150 million people of Bangladesh. This clearly indicates good prospect for the life insurance business in Bangladesh. Since the privatization of insurance companies, this industry is growing rapidly. However, the number of life insurance policyholders is not increasing satisfactorily. In 1990s, there were 4-5 persons per thousand life insurance policyholders, which increased 10-12 persons in 2000. At present, this rate is 1% only. Lack of innovations in product development in life insurance sector is perhaps one of the main factors for this slow growth of life insurance business in Bangladesh.

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