This study examines the influence of financial literacy, risk aversion, mediating effect of persuasion on insurance demand in Indonesia. A survey questionnaire conducted among 240 respondents in productive age range, around 18 to 45 years old. The result of hypothesis testing was conducted by Smart PLS 3.0. The result shows that financial literacy and risk aversion were directly and significantly related to persuasion. The financial literacy and risk aversion have positive influence towards insurance demand. Persuasion significantly mediates the relationship between insurance demand, financial literacy, and risk aversion. Financial literacy directly proportional to the increasing of insurance demand. People tend to buy an insurance to avoid risk when they are prone to accident, have health issue, or to protect the wealth. Since insurance provides non-direct benefit where people will get the benefit through some conditions, consumer is needed to be educated, convinced, motivated, and advised to enroll an insurance policy. Further research can be explored in more factors such as different age group like Gen X, Gen Y, Millennials to see the influence of age group on insurance demand. Since this research only focus on Indonesian people, respondents from other country or region may lead to other findings. Political situation, pandemics and geographic factors also can be used to provide more explanation on what factors that influence insurance demand completely.

Keywords

Insurance Demand, Financial Literacy, Risk Aversion, Persuasion