Life Assurance not only about death…But are investments and pensions too: ZIMNAT COO
By Insurance24
HARARE, Life assurance is largely associated with death and benefit accrued thereof. However, one is bound to think so, as a life insurance contract is defined as a contract in which: benefit may be payable on or following the death of the policyholder; or benefit(s) may be payable provided the life survives for a given term.
It is the latter part which many do not really understand and insurers on their part have also not played their part in spelling out some of the actual benefits that include savings for certain events.
During the June 2018 session of the Zimselector/Ipec journalists awareness mentoring programme, ZIMNAT Life chief operating officer Elizabeth Rabvukwa, unpacked the Life Assurance products and distribution, of which some of them are as good as an investment for future events such as education.
In her own terms, she said Life Insurance can be termed as an agreement between the policy owner and the insurer, where the insurer for a consideration agrees to pay a sum of money upon the occurrence of the insured individual’s or individuals’ death or other event, such as terminal illness, critical illness or maturity of the policy.
She indicated that Life Insurance can be sold either to Groups or Individuals and these groups may be made of employees, members of a club, association, church, mosque among others.
“The policy is mainly to provide benefits to named beneficiaries of any group member who passes on (unfortunate death) during the policy period,” she said, adding that types of products sold to Groups and Individuals differ.
Rabvukwa highlighted four types of individual life products that include Term Life Insurance, Endowment Insurance, Permanent /Whole Life Insurance and Unit Linked Plans.
In terms of the Term Life Insurance, the sum assured is payable only in the event of death during the term.
In case of survival, the contract comes to an end at the end of term and expires with no value. Rabvukwa said the Term Life Insurance can be for period as long as 40 years and as short as 1 year. It has No refund of premium and Low premium as only death risk is covered.
Its benefits include that it is the most affordable form of life insurance, and can be used for mortgage protection. In addition to that, can be tailor made to suit financial pressures during a certain life period.
Endowment Insurance are investment oriented plans and they differ from term and whole life plans in that they pay a maturity benefit. In scenarios, death and survival, a payout is made for instance Educational Plan and Investment Plans.
According to Rabvukwa, endowment insurance offer a maturity value and help families to save for specific needs at specific intervals in the family life cycle.
The Whole Life Insurance, on other hand is another type of Endowment which covers death for an indefinite period. The Policyholder is covered for the entire life and a lumpsum is paid to the identified beneficiary/ies upon the death of the policyholder. Premium is higher than that of Term Life as payment is always made.
Rabvukwa said there are two types of permanent/whole life plan that include the Ordinary Whole Life that is a continuous premium payment plan and Provides dual facility of protection plus savings.
On the Limited Payment Whole Life, premiums are paid for a limited period but the insured remains covered for life.
Benefits of the whole life plan include provision of Livable Income, Mortgage Protection, Estate Duty Payment/Settlement, Key man Assurance, Buy & Sell Agreements and Executive Bonus.
Unit Linked Plans according to Rabvukwa are a variant of the traditional endowment plans. She said they pay out sum assured /estimated maturity value (or the investment portfolio if its higher) on death /maturity and they are linked to markets. “For example, the Zimnat Personal Pension Plan,” she said.
This according to Rabvukwa is very flexible and the returns can be good if the markets perform well.
Unit linked plan can be in the form of Retirement annuity plan which are basically retirement plans and provide retirement income so that people do not endure but enjoy their retirement years. Some products are known on the market as Personal Pension Plan.
Benefits of retirement plans are that they replace lost income when one eventually retires and maintain independence at old age. Additional benefits are that it supplement income from group pension schemes and have tax incentives/relief and the proceeds are exempted from estate duty payment.
According to Rabvukwa, there are various types of insurance distribution channels that include Direct channel –Agents/ Financial Advisors, Brokers, Special Channels such as Banc Assurance arrangements, Independent agency, Mobile networks and Online Channels.
She however said the most common used channel is the Direct channel despite it being one of the most expensive channels.
Agents
Conduct business on behalf of life assurance companies. They represent the life assurer. As at 31 December 2018, life assurance companies had 1 613 agents.
Brokers
A broker is an individual/organization acting as an agent of the buyer as well as personal advisor on life assurance matters. Brokers negotiate with insurers on behalf of the buyer for the most appropriate insurance covers at competitive premium rates.
Bancassurance
It refers to selling of insurance through banks. It is an arrangement between the bank and the life assurance company to help distribute insurance products through the use of the bank’s huge clientele base.
Mobile networks
Companies also use mobile networks to distribute their life assurance products. Consumers will access life assurance products directly from their mobile phones.
Online
The growth of information on the internet has also increased the amount of time that people spend on it. Companies use their websites to market life assurance products to online users. This brings convenience to the consumers as they can access these products in the comfort of their homes.
