Predicting Factors of the Life Insurance Policyholder’s Self-Disclosure on Medical History Information

Abstract

In recent times, increased market awareness in Malaysia has demonstrated the value of life insurance safety. The fact that upward demands on life insurance applications have been observed since 2018, the medical and hospitalisation claims disputes have been reported to increase from 39% in 2018 to 41% in 2019. Among others, the reason underlying the disputes is due to non-disclosure or misrepresentation of material facts in the application. Thus, this study aims to examine the factors predicting the potential policyholder in self-disclosing their medical history information i.e, the Customer Perceived Benefit, Customer Perceived Risk, and Customer Perceived Confidence by means to avoid fraud allegations. This study employs a quantitative method using a questionnaire distributed to the policyholders from five insurance companies that are registered under the Life Insurance Association of Malaysia. Data were obtained from 139 respondents and further statistically analysed. Findings revealed the majority of respondents are willing to disclose their medical history information during the inception period of policy purchase as they are in a good state of health. They are also aware that failure to disclose medical history may result in claim rejection and policy cancelled, indicating potential fraud may occur. This study also provides further insights on the need to educate and provide appropriate advice to the potential policyholders by the insurers prior to policy activation. Future research may provide conclusive findings on selfdisclosure when it is conducted through interviews or observations in a controlled setting. This is to ensure the important information is fully and sufficiently disclosed for policyholders' protection from any serious allegation of fraud.