FINANCIAL LITERACY AND LIFE INSURANCE ADOPTION AMONG YOUNG ADULTS IN LAGOS STATE, NIGERIA

ABSTRACT The paper will examine the connection between financial literacy and adoption of life insurance among the young adults in Lagos State, Nigeria between the ages of 18 and 35. The life insurance uptake among this group is alarmingly low in spite of the critical role that is played by the life insurance in securing financial security. The study fills a considerable empirical gap by estimating the effects of these particular elements of financial literacy as determinants of the decision to purchase life insurance. Primary data was obtained in a sample numbering 100 young adults in selected urban and semi-urban areas in Lagos State using descriptive-correlational survey design. To test the relationship between the level of financial literacy and the ownership of life insurance, a structured questionnaire was used to assess objective financial literacy, which is measured by knowledge of fundamental concepts related to compound interest, inflation, and risk diversification and life insurance adoption status. Chi-Square test of independence was used to test the relationship between the level of financial literacy and the ownership of life insurance. The findings showed that there was a statistically significant positive correlation between financial literacy and adoption of life insurance ( 2 = 15.38, p = 0.0001), thus the null hypothesis was rejected. In addition, a secondary analysis proved that the level of risk management knowledge also has a significant impact on adoption choices ( 2 = 14.72, p = 0.0001). The results show that young adult financially literate people have a significant chance of purchasing life insurance in comparison to their financial illiterate counterparts. The research concludes that the financial literacy, especially in the major aspects such as risk and long-term financial planning need to be enhanced in improving the life insurance penetration among young people in Nigeria. It suggests specific financial education curriculum, incorporation of insurance literacy into formal and informal learning systems and application of digital fintech solutions to reduce the knowledge gaps and promote informed financial decision-making. The study will add useful empirical data to direct policy, educational, and industrial interventions to ensure that young adults in the city of Nigeria become financially included and secure.