The conventional life insurance and family Takaful market penetration rate was at 54.6 percent in 2015 indicating that about half of the Malaysian population is still uninsured. This study is conducted to investigate (a) the relationship of life insurance ownership with demographic and psychographic factors, and (b) the mediating effect of risk perception on the relationship between psychographic factors (i.e. personal value, risk attitude and trust) and life insurance ownership. A stratified random sampling technique was used to collect data from July to December 2015 in the four states located at the Northern regions of Malaysia, namely Kedah, Perlis, Penang and Perak. A total of 408 individuals approached at their work places and shoppers intercepted in the malls were surveyed. The data collected were analysed using binary logistic and multiple regressions. The respondents in their 20’s and 30’s are found more likely to own life insurance as compared to the respondents aged below 20 years old. Most of the life insurance policyholders are males, Chinese and Indian, and those who are middle income earners. The findings on psychographic factors show that trust has a significant positive relationship with life insurance ownership, and there is a significant mediating effect of risk perception on the relationship between trust and life insurance ownership. The respondents who trust their life insurance agents are found to have low risk perception of the purchase of life insurance. Thus, they tend to own life insurance. This study proposes that extensive ownership promotions of family Takaful and micro-insurance be targeted to Muslim individuals and low-income earners. The actions in fulfilling prospective policyholders’ needs, building trust in life insurance agents and creating awareness about the importance of life insurance are vital to encourage those who do not own life insurance to purchase life insurance
