Change current attitudes about life insurance

Like other types of insurance, the life insurance market is facing fundamental change. As technology reshapes consumer behaviour, there’s a discernible shift in the way people buy life insurance. The digital era has put power in the hands of the consumer. Appealing directly to the consumer’s mind is the new norm in the digital economy.

Then there is the unfolding demographic change – expanding middle class, increasingly younger, urbanized population – that has seen the emergence of tech-savvy consumers seeking products (and financial solutions) tailored to their needs. In the new digital era, throwing products at consumers will simply not work. The secret lies in empowering them with information on how those products are relevant to their lives and aspirations.

A report published in 2013 by global consultancy firm PricewaterhouseCoopers revealed that an increasing number of consumers are buying life insurance online. Sixty per cent of consumers aged 18-54 years said they found purchasing life insurance online attractive. In developed economies like the US, the Web plays an important role in 80 per cent of life insurance purchases, mostly by the younger generation. This calls for a rethink of how life insurance is sold and distributed. Financial services like banking are now accessible almost entirely via digital platforms – online and mobile – and insurance should be no exception.

However, certain cultural and social factors impede uptake of life insurance, especially in countries like Kenya where insurance penetration remains low. To start with, life insurance is viewed as a complex financial product, thus making it difficult to sell. Yet life insurance is an asset to cushion against future financial risks arising from death and loss of income by the policyholder. Life insurance is meant to protect the dependents of the insured person. It is therefore both a savings tool and a vehicle for social protection.

Unfortunately, many Kenyans tend to shun saving for the future, instead relying on social institutions like fundraisers to take care of their financial contingencies. Note that such initiatives are not bad. My point is that we need to debunk certain attitudes and myths that prevent people from taking out life insurance. This requires concerted awareness campaigns on the benefits of insurance in general.

For life insurance, it entails demonstrating how saving in the present translates into financial comfort for self in the future and even for one’s family in the event of demise. It can also be a path to a happy retirement.

Life insurance is not all about dying, otherwise it would be called death insurance. Taking out a life insurance policy does not mean that one is about to die or contemplating death. It means they are catering for the possible adverse financial consequences of one’s demise or incapacitation on his or her family. 

Changing prevailing attitudes and beliefs about life insurance will, however, not be an easy task if a recent survey by the Association of Kenya Insurers is anything to go by. The survey shows that most Kenyans rely on word of mouth as the most trusted and reliable source of information on insurance. This means that popular misconceptions about life insurance pass easily from person to person.

On the flip side, this is a great opportunity for local insurers to tap into this phenomenon using technology to create a direct conversation with consumers and promoting informed discourse on life insurance.