How Life Insurance Can Save You, Family
By Benjamin Nkaka
We live in a world full of uncertainties. We do not know what tomorrow will bring us as the responsibilities keep increasing significantly. Life insurance is the answer to all of these uncertainties. It’s important to remember that when your family is going through a crisis that transcends finances, at least it won’t be impacted too negatively. If a breadwinner dies, the spouse and children will not have to beg for alms or drop out of school.
The social and economic impact of the Covid-19 pandemic is leading to new thinking about how we perceive risks. The future has become uncertain. During these unforeseen times, we need to assess ourselves and make informed decisions. Life insurance has never been more important. No one will ever go wrong with life insurance.
There is very little awareness on life insurance and insurance related issues in Tanzania. As such, life insurance is a nascent idea and most people don’t think of it as an investment plan. With rising inflation, taxes, or business uncertainties, it’s important for individuals to focus on financial planning at an early stage.
Saving through term deposits, stocks, and treasury bills are very common financial planning tools that people use these days, but life insurance is not on the list.
Life insurance is a contract designed to pay out a lump sum after a fixed term (at its “maturity”) or upon death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay for critical illness.
While the primary goal of purchasing a life insurance policy is to protect one’s family against unforeseen circumstances, it can also help preserve and provide access to cash at a difficult time, if it does. is added as part of financial planning for dependents.
There isn’t a specific time to start purchasing life insurance, but the earlier in life the better, as premiums increase with age. In addition, it should be purchased before retirement age so that it helps prepare for financial stability after retirement.
Life insurance would require you to pay a monthly premium or an annual premium over the life of the contract to achieve your goal. At the end of your contract, you or the beneficiary will receive a lump sum with bonuses and you will receive monthly remuneration according to the type of contract. Otherwise, you will continue to receive payment until the last day of your life.
This type of financial plan does not require you to employ someone to take care of your insurance and does not require any cost other than monthly premiums. Let it rain, let it rain, may your benefits or your savings never be affected. Neither inflation nor taxes will affect your benefits.
Another important reason you should invest in life insurance is that certain products will continue to fund your child’s education in the event of the unexpected death of the primary breadwinner.
Planning for children’s education is not a common program in many families. When it comes time to take the child to school, the financial stress begins to sting, while it can happen when the breadwinner is alive, it is hard to imagine what can happen when the breadwinner is alive. left.
I was talking to a friend and asked him why he wasn’t interested in buying life insurance, but he has insurance for his house, his car and even for his expensive cell phone, yet he had one. family he was supposed to care about. His answer made me laugh, but then he remained serious and offended. He really had a superstitious fear that if he bought life insurance he would suddenly be more likely to die.
After engaging with a number of people, it turns out that such superstitious thoughts are a common reason people shy away from getting life insurance because they would assume it is bad omen. My advice to my friends is that if you take out life insurance your risk of death will not increase. In fact, the peace of mind of knowing that your loved ones would be doing well financially even if you were to die, thus bringing a sense of calm and security, ultimately lowering blood pressure.
Most people overestimate the cost of life insurance, thinking it is very expensive to pay.
However, the premiums are generally affordable and it is possible to choose an option that matches your financial capacity to pay your monthly contributions.
As the use of channels in other services, including banking services, leads to increased use and rapid delivery of services, insurers offering insurance services should aggressively promote their services. and digitizing customer journeys to create demand, because digital solutions have proven to be effective. to be the most accepted and preferred distribution channel.
Life insurance service providers are also expected to embrace and leverage partnerships, which will help meet unmet needs and reach unserved customers.
An effective partnership can be a critical factor in promoting life insurance services. Insurers should consider designing a partner-centric business model with banking and telecommunications to make insurance accessible to low-income customers and gain access to a large base of existing customers.
Mr Nkaka is an insurance expert based in Dar es Salaam