THERE are essentially two things that are guaranteed in one’s life, taxes and death.
While talking about taxes is something that fits and is widely used in everyday conversations, the subject of death is discussed with caution to many.
In a typical African setup this topic of death is considered a taboo.
Each time one brings up the topic, others become suspicious; they contemplate whether the person initiating the topic is trying to eliminate those being told.
Other than those in formal employment, people rarely talk about life insurance hence the considerably low uptake of this form of insurance in Zambia and many African countries especially outside South Africa.
While our friends in developed countries have treasured this form of insurance we have lamentably lagged behind.
This negative mindset on death has contributed to our current social wellbeing that is so difficult for the survivors when a breadwinner dies.
Because of the low acceptance of life insurance an average person from a family without life assurance is made to work twice as harder as one from a family with one.
This is because of the benefits that are paid upon the death of the one assured where such a policy exists.
The way life assurance works is such that the one who buys the policy will select the life assured who may be himself or any other family member provided insurable interest occurs.
The issue of insurable interest was introduced many years ago to deter unscrupulous people who would go to hospitals and effect life policies on patients on the death bed and put themselves as beneficiaries.
Upon such a person dying then the one who effected a life policy would claim benefits as a beneficiary.
Beneficiaries are also nominated from the inception of the policy. He or she is a person who is entitled to receive the payments or sum assured when the assured person dies.
How many people are not ready to think of the next generation or those who are left behind upon their passing on?
Many people out of selfishness or sheer ignorance wonder as “why should someone come and benefit from my death!”
Even when it comes to married couples this subject is rarely discussed. I bet most spouses would rather their partners die earlier than them.
This is the typical mindset of an average African who does not think about the wellbeing of those who remain behind after they pass on.
This is the more reason we need a lot of education on such matters.
Life assurance takes two forms, term and whole life or endowment policies. The former is taken for a specific period and if the insured event which is death or incapacitation that lead to loss of employment for example occurs then the benefits are paid out to the beneficially.
If the insured event doesn’t occur cover ceases and no benefits are paid.
Premiums are, therefore, paid throughout the duration of the policy period. Term insurance is an acceptable form of collateral that can be used in many financial transactions.
The other type of life assurance is called whole life, which can either be with profits or without profit. The premiums are paid throughout the life of the assured.
The mechanisms of profits depend on a particular insurer. As the assured makes his contributions to the insurer, the funds are investment in many investment vehicles and earn interest or profit.
When the profit is declared the policy holder is allowed to participate in sharing the same while they are still alive. If they pass on then the profits together with the sum assured is paid to the beneficially.
Many employers arrange what is called Group Life Assurance (GLA). This arises from the moral obligation they have for their employee’s wellbeing. Benefits are in multiples of annual salaries of employees.
In many jobs GLA policies form part of the conditions of service.
For those in formal employment this is a good condition but what about many other people who are not in formal employment who form the majority of the citizenry?
The more those who are not in formal employment are captured the better because they are the majority.
Comments: webster@picz.co.zm or webster_tj@hotmail.com or on face book search for Insurance Talk-Zambia page or call/text 0977 857 055
[The Author is a Chartered Insurer with 12 years industry experience]