The Importance of Financial Literacy in Consumer's Optimal Choice of Insurance

Current research evidence suggests that one of the causes of insufficient use of options provided by the single market for financial services is a very low level of financial literacy in the population. In case of insurance market, the situation is even more difficult because the specifics of insurance further complicate the ability of individuals to understand the wide range of risk coverage supply, for example compared to conventional banking products. Indeed, to give substance to the term financial literacy defined as "the ability to use knowledge, skills and experience to manage people's own resources effectively in order to ensure lifelong financial security for them and their households" in the field of insurance, not only insurance products knowledge is sufficient. Also proper evaluation of individual's own needs, respectively the risks arising from a particular lifestyle, the size of assets, plans for the future etc. are needed. The aim of the paper is to define the key determinants influencing present level of financial literacy in the field of insurance based on the research conducted abroad and to compare it with authors' own investigation in the case of Slovak market.