Welcome to another week of financial learning. Financial education as a focus has two main goals i.e prevention and controlling of monetary damages.
The preventive aspect of financial education is to ensure that monetary challenges do not come our way in the form of hunger, bad investment, poverty and struggles on retirement.
That calls for education around savings, investments, pensions and financial discipline.
Financial education, however, has the control aspect that deals with the effective management of calamities and mishaps.
As a Christian, I always pray for goodness and mercies to follow me all the days of my life likewise others.
I pray and fast for direction with every step, I take. However, as I always say, we live in an imperfect world full of uncertainties. This world is full of surprises!
To protect ourselves from some of these uncertainties, we tend to fortify our houses with security equipment, hire security guards and dogs, and buy durable vehicles to mention few.
We do these because we know anything can happen! It is against this backdrop that I introduce today’s discussion on Insurance.
Insurance is defined by the Oxford dictionary “as an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness or death in return for the payment of a specified premium.”
I would want to break this definition into simple words. Insurance simply means an agreement between two parties say A and B where A agrees to restore and replace anything that B loses in future on condition that B pays him a specified amount called premium monthly, quarterly or yearly.
I hope I have not confused you the more with this explanation.
Insurance is deemed by many as a stressful activity in Ghana right from the registration to the redemption of claims. I want to quote this profound write up by Art Josetti.
According to Josetti, “Insurance is tricky. It’s not like buying a chair or a shirt or groceries. When you buy insurance, you’re buying a promise. It is a promise that if something catastrophic happens to your business, your carrier is going to assist you to make your business whole again.”
He adds “Insurance is a safety net for when risks go wrong, Life insurance can support the life of a family, should a member be lost”.
In my life of work, I happen to have financial discussions with many people. I can say confidently that insurance is not a priority for most of them.
People insure their cars because it is mandated by law. People insure their office space because it is a regulatory requirement.
Beyond the mandatory insurance schemes, many Ghanaians do not appreciate the importance of insurance. The misunderstanding perhaps comes from their experiences with some insurance companies in the country.
Bad experiences breed bad reception! The popular stories we hear about insurance in the country have to do with motor vehicle accidents. Some claim that they struggle sometimes from months to years to have their claims paid after an accident. Others complain that, beyond the delays, the claims paid are mostly insufficient.
I am sure that the insurance companies have a litany of reasons for the delays and “unsatisfactory amounts”.
Nevertheless, what we need to know is that insurance just like banking service is built primarily on trust.
The fact that one person has been frustrated with the claim draws some form of doubt about the system.
These experiences frustrate people not to even insure their homes and properties that do not fall under the mandatory bracket.
Some of the client service staff of the insurance companies in Ghana are very rude and unwelcoming.
They attend to claims as if they are doing the victim a FAVOR! The way they respond to you alone can make you regret ever signing up for an insurance policy.
Speed is another factor that discourages people from eagerly buying insurance policies in Ghana.
People expect speed responses to their call for claims. This brings to the fore explanation of terms and conditions at the signing stage.
My car once had a fire accident. I reported the matter to the insurance officer immediately after the incident happened and was even asked to take pictures.
Unknown to me, I had to call Ghana fire service the same day to assess the situation and write a report needed for my claim.
I got to know of this process when I received the to-do list from the insurance company.
How many people have knowledge of this process? Answer a FEW!
Insurance goes beyond our belongings. Life assurance is another key form of insurance that needs attention.
There are nicely tailored insurance packages that seek to restore us against loss of life, illness, and accidents.
The interesting thing about these packages is that the premiums are determined by yourself. How much you want to earn in the future determines how much you pay today.
This, therefore, goes for everyone irrespective of your income level.
I remember when I signed my parents onto life insurance many months ago.
The sales officer asked me for the age of my parents and how much I wanted as a claim should they pass on.
Details that I provided led to my monthly premium. Death is inevitable and will happen to everyone. It is therefore important that we put such things in place now to ensure our dependents do not suffer in our absence.
The scenario also goes with injuries and accidents. Insurance will help you with the hospital bills, medicine, surgeries to mention few.
I write these with personal experiences.
The insurance companies should also learn to use technology in engaging clients now.
The premium statement should now be made available online.
Payment of premiums should also move from checks and bank deposits to the use of mobile money.
People should start having the feeling of control when it comes to the payment of their premiums.
Technology is changing our way of life. In the shortest possible time, people will start insuring mobile phones and computers against theft and viruses.
It has started in some parts of the world.
We now buy mobile phones at the cost of GHS 3000/$545. That is a big investment now.
Insurance companies will in the near future charge premiums for the replacement not done carelessly or willfully.
Africa will get there soon. Insurance firms in Ghana should, therefore, take advantage of our growing population and expand their scope i.e. public education.
The illiteracy rate in Ghana even though has seen some improvement over the years is still low as compared to the developed world.
Unfortunately, most of the informal sector workers fall within this bracket, thus, they need more education and seminars to see the light.
These training and education programs can be done through our religious bodies.
I will like to end this epistle by encouraging everyone to buy insurance packages for their cars, homes, life, children’s’ education and other dependents.
The promise of restoration will be very helpful tomorrow. Had I known is always at last!
I wish everyone a wonderful and memorable week!
Patrick Baah Abankwa is a chartered banker with over 6 years experience in main stream banking having worked in various capacities. He is currently at the Branch Manager Position of his institution.
He has been a qualified member of the Chartered Institute of Bankers, Ghana with a good membership standing since the year 2013.
He also holds EMBA and BA from Kwame Nkrumah University of Science, Technology, and the University of Ghana respectively.
Patrick is the originator of the daily epistle dubbed “Savings Tip of the Day” which has been running for over a year on WhatsApp and Facebook.
Patrick has also been teaching on the Topics Savings, Investment and Financial Independence for over 2 years and a research fellow for ILAPI Ghana. He runs a financial channel on Youtube by name “Patrick TV Gh” and has appeared a couple of times on the business segment of TV3 News 360.
Patrick is into youth facilitation and counselling. He can be contacted via firstname.lastname@example.org and or 0243984492.
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