Abstract The Malaysian insurance and takaful industry has enjoyed encouraging growth in the last decade despite the global economic crisis. This paper aims to investigate the driving force of the life insurance and family takaful consumption in Malaysia, using annual time series data covering the period from 1970 to 2008. To investigate the long-run relationship and short-run dynamics of the theorized variables on the demand for life insurance and family takaful, the autoregressive distributed lag (ARDL) bounds testing are employed. Computation of the F-statistic for testing the significance of the lagged levels of the variables in the error correction format of the underlying ARDL model confirmed the existence of cointegation between the variables under study. The estimations of the coefficients of the long-run relations and of the error correction model find that income, education level, and EPF are among significant predictors of the life insurance and family takaful consumption
