Life assurance and its attendant repercussions

BY: Ernest Baffour Awuah
Life assurance
Life assurance

The penetration rate of life insurance in Ghana still hovers around two to three per cent. This rate is alarming and calls for a conscientious approach or, preferably, a dialogue to engage all on the need to insure one’s life.

The rate comes to confirm the fact that many Ghanaians do not see the wisdom of hanging one’s responsibility on a third party institution in the case of unforseen circumstances.
Market sellers or players in the informal sector are volatile here. The ordinary Ghanaian on the street knows little or nothing about its essence.

Life assurance is a process of entrusting a whole life contingencies to another person for the latter to indemnify the former.

Life assurance is a pool where two or more people put their resources together to assist an aggrieved or handicapped person in times of need.

In a situation where one needs help or assistance in terms of unforseen circumstances such as death, injury, disaster, total and permanent disability and the likes, life assurance reimburses or restores the person to his or her former state of life.

There are different types of policies ranging from education, life, funeral, group, properties, etc. With more than 20 life insurance companies in Ghana, the issue of credibility prompts the payments of claims.

The availability of the insurance company in times of need is a pertinent issue the ordinary Ghanaian would ask when faced with finding the best among the rest.

In Ghana, the National Insurance Commission (NIC) is the sole body mandated for regulating the activities of life insurance companies. It revokes and licenses third party insurance institutions in Ghana.

Insurance companies among their repertoire of knowledge, engage both formal and the informal sectors on the need for insurance, according to the preference of the client to the proposed life insured.

After a client signs onto an insurance policy, a sum assured is offered to the client when the unforseen circumstances happens.

In this case, the credibility of the insurance company comes into play. This explains why a majority of insurance companies continue to grade low in their market share.

It is, however, incumbent on third party insurance companies to strengthen the bond of transparency and genuineness with their life insured and the general public as a whole.

The writer is an Insurance Expert based in Kumasi