THE ROLE OF FINANCIAL LITERACY IN ENHANCING UNDERSTANDING AND ADOPTION OF INSURANCE AMONG YOUNG PAYLATER USERS

Abstract

This study explores the role of financial literacy in understanding and adopting insurance products among young users of Shopee Paylater, a popular e-commerce platform offering Buy Now, Pay Later (BNPL) services in Indonesia. With the increasing reliance on digital financial services, especially among Millennials and Gen Z, financial literacy plays a crucial role in shaping financial behaviors, including the comprehension and ownership of insurance products that align with Islamic principles. This cross-sectional study employs quantitative data collected from 80 respondents aged 18-30 who actively use Shopee PayLater. The data were analyzed using SPSS software, employing the chi-square test to analyze relationships between variables. The findings reveal a significant relationship between financial literacy and both insurance understanding and adoption, with respondents possessing higher levels of financial literacy being more likely to understand (p-value = 0.001) and own insurance (p-value = 0.000). Interestingly, other factors such as gender, age, education, and job occupation did not show significant relationships with insurance undertanding and ownership. Furthermore, while the frequency of Paylater usage (intensity) had no significant relationship on insurance understanding (p-value = 0.205), users with longer durations of Paylater experience exhibited better comprehension of insurance products (p-value = 0.041). The results emphasize the importance of integrating financial literacy education, particularly through gamification and personalized learning using machine learning on digital platforms to improve users’ awareness and promote the adoption of syariah-compliant financial protection products like takaful. This study highlights the need for targeted digital literacy initiatives to promote financial inclusion, particularly in advancing syariah insurance for a sustainable future.