Figure 1.
The flow begins with insurance literacy knowledge dimensions, covering the ability to identify and manage risks, understand insurance principles and products, recognise rights and responsibilities, and acquire and evaluate relevant information. Applying this knowledge in practice then reveals insurance literacy gaps, where consumers struggle to understand coverage, contractual conditions, policy obligations, and incomplete or biased information. These gaps are then explained by insurance literacy theory, which links limited capacity to interpret insurance terms with literacy gaps and connects insurance literacy with informed decision making across the insurance lifecycle and long-term financial well-being. Understanding these principles then leads to the implications, where low insurance literacy connects with poor decision making, coverage gaps, disputes, mistrust, and greater vulnerability to harm, while higher literacy connects with informed choices, adequate coverage, fair treatment, and improved financial well-being. The implications then provide feedback for improving literacy and decision making, returning to the insurance literacy knowledge dimensions. The full framework operates within the insurance product lifecycle and the regulatory framework.Insurance literacy feedback loop
Source: Author’s own work