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Have you ever asked yourself the following questions?

1. What is life insurance?
2. What are the various types of life insurance?
3. Why do I need life insurance as an individual, family or a business owner?
4. How do I buy a life insurance policy?

This article will help you find answers to these questions and many more.

Beyond being a financial instrument, life insurance becomes a cornerstone for individuals and businesses – offering a sense of security that extends far into the future, securing one’s life as well as the lives of cherished family members; and stands as an important pursuit, especially in the face of the future’s unpredictable nature.

What is life insurance?

Life insurance is a contract between a policyholder or the insured and an insurance company, whereby the policyholder pays the premium and receives a sum of money upon the death of the insured (paid to beneficiaries) or after a certain period. The sum of money is known as ‘life cover’ and helps to secure your family’s future needs by paying them a lump-sum amount in case of the policyholder’s death. However, in many life insurance policies,the insureds are paid an amount called ‘maturity benefit’ which is generally provided at the policy term’s end.

Under a life insurance contract, an agreed sum called sum assured becomes payable, if the insured event takes place in the manner as stated in the policy. The insurer charges ‘appropriate premium’ to cover the risk involved. Since premium is the price charged for covering risk on human life, it must be sufficient to cover the cost of risk involved. In life insurance, the product insured is ‘human life’. It is quite difficult to judge accurately the exact cost of risk involved.

Therefore, a tool is developed to arrive at the chance of death or survival at various ages. It is called a mortality table. This represents the experience of assured lives who have been insured for one year or more with the insurer. Mortality denotes rate of dying at a particular age for a period of one year. Mortality differs from person to person, year to year – and also between male and female. In Ghana, there are 21 life insurance companies which underwrite various life insurance policies.

Types of Life Insurance

Life insurance can be grouped into three main types: which are term insurance, whole life insurance and endowment policy.

1. Term Insurance

Term insurance policy deals with insurance against death but has no investment component. It is typically taken for a specified period of time. The premiums are generally high in comparison to the other types of insurance, such as permanent insurance. The amount paid as premium gradually rises over a certain time period, and on death of an insured the sum insured (compensation amount) is paid to dependents of the insured.

2. Whole Life Insurance

Whole life insurance is the generic name for a cash-value policy that provides lifetime protection. This is a type of life insurance policy with an investment component. Under a whole life policy, the policyholders are eligible to get protection throughout their life and also receive returns on the investments component. It is usually preferred by policyholders with long-term investment goals who also desire alternative sources to meet emergency financial needs.

A funeral finance plan is structured more like a whole life insurance policy, as it provides coverage for the insured’s entire lifetime and often includes a savings or cash value component that can be used to cover funeral expenses.

3. Endowment Policy

The endowment policy’s main feature is that the sum assured is payable on a fixed maturity date or on the earlier death of an insured or policyholder. It is a contract that has a cash-in or surrender value. Levels of premiums are payable throughout the policy. Premiums on endowment policies are higher than those of whole life policies, as a set maturity date means that a majority of claims will be made earlier and therefore have a shorter period to run and hence to collect premiums; the shorter the tern, the higher the premiums.

Child education plans may be structured as an endowment policy. This provides coverage for a specified period, and upon maturity they pay out a lump-sum amount that can be used to fund the child’s education. For example, If Ama wants to provide a basic university fund for her 1year old son, she may take out a GH¢100,000, 15 years endowment policy. The funds will be available whether Ama lives or dies.

Importance of life insurance policy

Having a life insurance policy provides a lot of advantages, not only to the policyholder but also their dependents. The following are some major benefits of any life insurance policy.

1. Death benefit

This is one of the primary benefits of a life insurance policy. If the insured person meets an untimely death, then the nominee receives compensation from the insurance company in the form of a death benefit. The compensation amount is usually the sum assured plus any bonus accrued over the period the policy was active

2. Safe and profitable long-term investment

Life Insurance is a highly regulated sector. The National Insurance Commission (NIC), the regulatory body, through various rules and regulations ensures safety of the policyholder’s money is the primary responsibility of all stakeholders. Life Insurance, being a long-term savings instrument, also ensures that life insurers focus on returns over a long-term and do not take risky investment decisions for short-term gains.

3. Replace income for dependents

If people depend on an individual’s income, life insurance can replace that income if the person dies. The most common example of this is parents with young children. Insurance to replace income can be especially useful if government or employer-sponsored benefits of the surviving spouse or domestic partner will be reduced after their companion dies.

4. Loan against the policy

Many reputable insurance companies offer loans against life insurance policies at affordable rates. Based on provisions of the policy, you can borrow up to a certain percentage of the sum assured. This can help manage financial exigencies without having to dip into your savings.

5. Pay final funeral expenses

Life insurance can pay funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.

6. Create an inheritance for heirs

Having a life insurance policy will enable individuals with no assets to create an inheritance for their family members by naming their heirs as beneficiaries.

7. Create a source of savings

Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of ‘forced’ savings plan.

8. Mortgage redemption

A life insurance policy can act as an effective tool to cover mortgages and loans taken by policyholders, so that in case of any unforeseen event the burden of repayment does not fall on the bereaved family.

How do I buy a life insurance policy?

The most common channels to purchase any life insurance policy are:

1. Directly from your insurance company

Individuals, family and businesses can purchase a life insurance policy by directly contacting their life insurance company. This can be done through phone calls, emails or a visit to the insurance company’s physical office

2. Through an insurance agent or broker

Life insurance policies can also be purchased through an insurance agent or a broker. Insurance agents sell for one insurance company while insurance brokers are independent intermediaries who can assist you to purchase your insurance package from any insurance company of your choice. Most corporate organisations use the services of insurance brokers because of the extra professional services they provide. Accredited agents of a particular insurance company can also be used.

3. Bank-led channel

Policyholders can also buy life insurance policy through their banks. This arrangement is known as bancassurance. Bancassurance is a partnership between banks and insurance companies that enables insurance companies to market and sell their insurance products to clients of the bank.

4. Other digital platforms

Some insurance companies have designed digital platforms and mobile applications that enable customers to purchase life insurance policies in the comfort of their homes and offices.

Conclusion

In conclusion, the presence of life insurance offers far-reaching benefits beyond mere peace of mind for the policyholder and their family. While undoubtedly providing a sense of security in the face of life’s uncertainties, life insurance also serves as a potent tool for building savings and facilitating future investments. The accrued value within a life insurance policy can serve as a valuable asset, offering a reservoir of funds that can be tapped into for various purposes; including educational expenses, homeownership, retirement planning or even entrepreneurship ventures.

SOURCEhttps://thebftonline.com/2024/02/14/why-should-i-buy-a-life-insurance-policy/

Financial literacy is often thrown around, but what does it truly encompass? Financial literacy is the ability to understand and manage your money effectively. It is the knowledge and skills that empower you to make informed financial decisions, navigate complex financial products, and ultimately achieve your financial goals. Whether you’re a young adult just starting or a seasoned saver nearing retirement, financial literacy is the compass that guides you towards financial freedom.

There are building blocks to financial literacy. Financial literacy is not one monolithic or unified concept. It is a collection of interconnected skills and knowledge. Below are some of the key building blocks we need to grasp:

UNDERSTANDING INCOME AND EXPENSES

Income and expenses are foundational to financial literacy. They give you a clear picture of your financial situation and empower you to make informed decisions about managing your money effectively.

Importance of Understanding Income and Expenses:

Financial Awareness: Understanding sources of income and tracking expenses fosters financial awareness by helping you recognise how much money you earn and where it goes. This awareness is crucial for maintaining control over finances and avoiding financial pitfalls.

Budgeting: Income and expenses are the building blocks of budgeting. By knowing how much money is coming in and how much is being spent, you can create realistic budgets that align with your financial goals and priorities.

Savings and Spending Decisions: Knowledge of income and expenses enables you to make informed decisions about saving and spending. You can identify areas where you can cut costs to increase savings or allocate funds towards specific goals, such as an emergency fund or retirement savings.

Debt Management: Understanding income and expenses is essential for managing debt effectively. It allows you to assess your ability to make debt payments and avoid taking on more debt than you can afford.

Strategies for Understanding Income and Expenses

Track Income Sources: Identify all sources of income, including salaries, wages, bonuses, freelance work, investments, and any other sources of revenue. Track the frequency and amount of income received from each source.

Monitor Expenses: Keep a record of all expenses, including fixed costs (e.g., rent, mortgage, utilities) and variable expenses (e.g., groceries, dining out, entertainment), then categorise expenses to gain insights into spending patterns and identify areas for potential savings.

Create a Budget: Use the information gathered about income and expenses to create a budget that outlines how money will be allocated towards various expenses and savings goals. Make adjustments as needed to ensure that spending aligns with income and financial priorities.

Use Budgeting Tools: Budgeting tools and apps streamline the process of tracking income and expenses, categorise transactions automatically, and provide insights into spending habits.

Review Regularly: Regularly review income and expenses to ensure they remain aligned with financial goals and priorities. Adjust the budget as circumstances change, such as changes in income or unexpected expenses.

Understanding income and expenses lays the groundwork for sound financial decision-making and is essential to overall financial literacy. By developing this foundational knowledge, you can take control of your finances, set achievable goals, and work towards financial stability and success.

BUDGETING AND CASH FLOW MANAGEMENT

Budgeting and cash flow management are essential components of financial literacy. They play a crucial role in helping you maintain control over your finances and work towards achieving your financial goals. Creating a budget allows you to allocate your income towards your expenses and savings goals. It’s about living within your means and ensuring positive cash flow.

Importance of Budgeting and Cash Flow Management

Living Within Means: Budgeting ensures that you spend within your means by allocating income towards expenses, savings, and financial goals. It helps prevent overspending and encourages responsible financial behaviour.

Financial Awareness: Budgeting promotes financial awareness by providing a clear overview of income and expenses. It allows you to track where your money is going and identify areas where you can cut back or reallocate funds to align with your priorities.

Managing Cash Flow: Effective cash flow management ensures you have enough liquidity to cover your expenses and financial obligations. You can avoid cash flow shortages and plan for irregular or unexpected expenses by monitoring income and expenses.

Prioritising Financial Objectives: Budgeting helps you prioritise your financial objectives, whether building an emergency fund, paying off debt, saving for a home or retirement, or investing for the future. It allows you to allocate resources efficiently towards your most important goals.

Strategies for Budgeting and Cash Flow Management

Identify Income Sources: Start by identifying all sources of income, including salaries, wages, bonuses, freelance work, investments, and any other sources of revenue. Then, determine your total monthly or annual income.

Track Expenses: Keep a record of all your expenses, categorising them into fixed expenses (e.g., rent/mortgage, utilities) and variable expenses (e.g., groceries, transportation, entertainment). Use tools such as spreadsheets or budgeting apps to track your expenses effectively.

Create a Budget: Based on income and expenses, create a budget that outlines how income will be allocated towards various categories, including necessities, discretionary spending, savings, and debt repayment. Set realistic limits for each category to ensure that spending remains within budget.

Review and Adjust: Regularly review your budget to assess your progress towards financial goals and identify any areas where adjustments may be needed. Be flexible and willing to make changes as circumstances change, such as changes in income or unexpected expenses.

Emergency Fund: Prioritize building an emergency fund to cover unexpected expenses or financial emergencies. Aim to set aside enough funds in a liquid, easily accessible account to cover 3-6 months’ living expenses.

Budgeting and cash flow management are essential skills for financial success. By creating and sticking to a budget, individuals can take control of their finances, reduce financial stress, and work towards achieving their long-term financial goals.

DEBT MANAGEMENT

Debt management is a critical aspect of financial literacy, as it involves understanding how to effectively navigate debt obligations to maintain financial stability and avoid potential pitfalls. Debt can be a powerful tool, but it needs to be managed responsibly. Understanding different types of debt, interest rates, and repayment strategies is crucial for avoiding financial pitfalls.

Debt Management and its Significance

Responsible Financial Behaviour: Debt management promotes responsible financial behaviour by encouraging you to borrow only what you can afford to repay and to use debt as a strategic financial tool rather than a crutch.

Financial Stability: Effective debt management helps you maintain financial stability by preventing excessive debt accumulation, reducing the risk of financial distress, and avoiding negative consequences such as bankruptcy or foreclosure.

Cost Savings: Understanding debt allows you to make informed decisions about borrowing, including comparing interest rates, terms, and fees associated with different types of debt. This knowledge enables you to minimise borrowing costs and save money over time.

Creditworthiness: Responsibly managing debt contributes to building and maintaining a positive credit history and score. A good credit score opens doors to favourable borrowing terms, such as lower interest rates and higher credit limits, which can save you money and improve your financial flexibility.

Strategies for Debt Management

Understand Types of Debt: Different types of debt carry varying terms, interest rates, and repayment requirements. It’s essential to understand the differences between secured debt (backed by collateral, such as a mortgage or auto loan) and unsecured debt (not backed by collateral, such as credit card debt or personal loans), as well as the implications of each.

Budget for Debt Repayment: Allocate a portion of income towards monthly debt repayment as part of your budget. Prioritise paying off high-interest debt first while making at least minimum payments on other obligations to avoid late fees and penalties.

Negotiate Terms: In cases of financial hardship or difficulty making payments, consider negotiating with creditors to modify repayment terms, such as extending the repayment period or negotiating lower interest rates. Many creditors are willing to work with borrowers to find mutually beneficial solutions.

Avoid Accumulating New Debt: Avoid accumulating new debt whenever possible while paying off existing debt. Practice disciplined spending habits and live within your means to avoid falling into a cycle of debt.

Seek Professional Help if Needed: If the debt becomes overwhelming or unmanageable, seek assistance from reputable credit counselling agencies or financial advisors who can provide guidance, debt consolidation options, or debt management plans tailored to your situation.

Debt management is integral to financial literacy. It enables you to make informed decisions about borrowing, repayment, and your overall financial well-being. By understanding and effectively managing debt, individuals can achieve greater financial security and work towards their long-term financial goals.

SAVING AND INVESTING

Saving and investing are fundamental pillars of financial literacy. They serve as key strategies for building wealth, achieving financial goals, and securing financial well-being over the long term.

Building wealth requires saving and investing. Financial literacy equips you with the knowledge to choose appropriate savings vehicles and understand the basics of investing, including risk tolerance and diversification.

The Significance of Saving and Investing

Wealth Accumulation: Saving and investing allow individuals to accumulate wealth over time by setting aside money for future use and leveraging the power of compounding returns to grow their assets.

Financial Security: Saving and investing provide a safety net and financial security during emergencies or unexpected expenses. Savings allow individuals to cover unforeseen costs without resorting to high-interest debt or depleting other assets.

Achieving Financial Goals: Whether saving for a down payment on a home, funding education expenses, building a retirement nest egg, or pursuing other financial goals, saving and investing provide the means to achieve these objectives systematically.

Inflation Protection: Investing in assets that outpace inflation helps protect the purchasing power of savings over time. By investing in fast-growing assets, you can preserve and potentially increase the value of your wealth over the long term.

Strategies for Saving and Investing

Establishing Savings Goals: Determine short-term and long-term savings goals, such as creating an emergency fund, saving for a vacation, or building retirement savings. Setting specific, measurable, achievable, relevant, and time-bound (SMART) goals provides clarity and motivation.

Choosing Appropriate Savings Vehicles: Explore different savings vehicles, such as savings accounts, fixed deposits, money market accounts, and high-yield savings accounts, to find options that offer competitive interest rates, liquidity, and security.

Understanding Investment Basics: Educate yourself on investment basics, including asset classes (e.g., stocks, bonds, mutual funds, ETFs), investment risk and return, diversification, asset allocation, and investment strategies. Understand how different investments work and their potential benefits and risks.

Assessing Risk Tolerance: Determine your risk tolerance, or your willingness and ability to withstand fluctuations in investment values. Consider factors such as investment time horizon, financial goals, income stability, and personal comfort level with market volatility when determining your risk tolerance.

Diversification: Spread risk and minimise exposure to any single investment by diversifying your portfolio across different asset classes, industries, sectors, and geographic regions. Diversification can help enhance portfolio stability and reduce the impact of market fluctuations on overall returns.

Saving and investing are essential components of financial literacy. They provide individuals with the tools and resources to build wealth, achieve financial goals, and secure their future. You can make informed decisions and maximise your financial potential by developing a solid understanding of saving and investing principles.

FINANCIAL PRODUCTS AND SERVICES

Financial products and services play a crucial role in your financial life by providing the tools and resources to manage your money, protect against risks, and achieve your financial goals. Financial literacy is essential for understanding the diverse array of products and services the financial industry offers and making informed decisions about their use.

Importance of Understanding Financial Products and Services

Informed Decision-Making: Financial literacy empowers you to make informed decisions about selecting and using financial products and services that align with your needs, preferences, and financial goals. Understanding different products’ features, terms, and costs helps you choose options that offer the best value and fit for your circumstances.

Risk Management: Financial products such as insurance help individuals mitigate financial risks by providing protection against unforeseen events such as accidents, illnesses, property damage, or loss of income. Understanding insurance coverage options and terms enables you to select appropriate policies that provide adequate protection without unnecessary costs.

Wealth Accumulation: Investment products such as stocks, bonds, mutual funds, and retirement accounts offer opportunities for wealth accumulation and long-term growth. Financial literacy lets you understand investment basics, assess risk and return characteristics, and build diversified investment portfolios tailored to your risk tolerance and financial objectives.

Credit Management: Credit products such as loans and overdrafts provide access to funds for various purposes, including purchasing goods and services, financing education, or covering emergency expenses. Financial literacy helps you understand how credit works, compare loans and other credit terms, manage debt responsibly, and build and maintain good credit scores.

Strategies for Understanding Financial Products and Services

Education and Research: Take the time to educate yourself about different financial products and services available in the market. Utilise resources such as financial websites, books, articles, and educational materials from reputable sources to learn about various products, their features, benefits, and potential drawbacks.

Comparison Shopping: Compare the features, terms, and costs of different financial products and services before deciding. Consider factors such as interest rates, fees, repayment terms, insurance coverage limits, investment performance, and customer reviews to evaluate options and identify the most suitable ones for your needs.

Seek Professional Advice: You should consider seeking advice from financial professionals, such as financial advisors, bankers, insurance agents, or investment brokers when evaluating complex financial products or making significant financial decisions. A trusted advisor can provide personalised guidance, recommendations, and insights based on your circumstances and goals.

Read and Understand Terms and Conditions: Before applying for or purchasing a financial product or service, carefully read and understand the terms and conditions, including contract terms, fees, penalties, exclusions, and limitations. Pay attention to the fine print and seek clarification from the provider if you have any questions or concerns.

Understanding financial products and services is essential for making sound financial decisions and achieving financial well-being. By enhancing financial literacy and staying informed about available options, individuals can effectively navigate the financial marketplace and make choices that support their financial goals and priorities. The financial world offers a plethora of products, such as loans, overdrafts, insurance, and investments. Financial literacy empowers you to understand these products, compare their features, and choose what best suits your needs.

FINANCIAL PLANNING

Financial planning is the systematic process of managing finances effectively, setting achievable goals, and developing strategies to attain those objectives. It encompasses various aspects of personal finance, including budgeting, saving, investing, debt management, insurance planning, tax planning, and retirement planning. Financial literacy is instrumental in facilitating financial planning by providing you with the knowledge and skills to make informed financial decisions.

The Significance of Financial Planning

Goal Setting: Financial planning helps you identify your financial goals, whether short-term, medium-term, or long-term, and prioritise them based on their importance and feasibility. Common financial goals include saving for emergencies, buying a home, funding education, planning retirement, or achieving financial independence.

Resource Allocation: Financial planning involves allocating financial resources, such as income and assets, towards various expenses, savings goals, debt repayment, and investment opportunities. It helps you optimise your resource allocation to maximise savings, investment returns, and overall financial well-being.

Risk Management: Financial planning includes assessing and managing financial risks, such as income volatility, market fluctuations, health emergencies, disability, or premature death. It involves evaluating insurance options, establishing emergency funds, and implementing risk mitigation strategies to protect against unforeseen events.

Wealth Accumulation: Financial planning aims to build and grow wealth over time by setting aside savings, investing in assets that generate returns, and leveraging tax-efficient strategies to minimise taxes and maximise investment growth. It helps individuals achieve financial security and achieve their desired lifestyle.

Role of Financial Literacy in Financial Planning

Assessing Financial Situation: Financial literacy enables you to assess your current financial situation accurately by understanding your income, expenses, assets, liabilities, cash flow, and net worth. It provides the foundation for setting realistic financial goals and developing appropriate strategies.

Setting Realistic Goals: Financial literacy helps you set realistic and achievable financial goals by understanding your financial capabilities, preferences, and constraints. It encourages setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals that are meaningful and attainable.

Understanding Financial Products: Financial literacy equips you with the knowledge to evaluate and select appropriate financial products and services that align with your goals and risk tolerance. It enables you to make informed decisions about savings accounts, investment options, insurance policies, and retirement plans.

Creating a Financial Plan: Financial literacy empowers you to develop comprehensive financial plans that address your short-term and long-term financial goals, considering factors such as income, expenses, savings, investments, debt, insurance, taxes, and estate planning.

Financial planning is essential for achieving financial security and realising financial goals. By integrating financial literacy into the planning process, you can make informed decisions, adapt to changing circumstances, and work towards a more secure financial future. This is the big picture.

WHY FINANCIAL LITERACY MATTERS

Financial literacy is pivotal in various aspects of personal finance, offering numerous benefits that contribute to your overall financial well-being.

Reduced Financial Stress: Financial literacy provides you with the knowledge and tools necessary to manage your finances effectively, leading to reduced financial stress and anxiety. By understanding how to budget, save, invest, and manage debt, you gain confidence in your ability to navigate financial challenges and uncertainties.

Informed Decision-Making: Financial literacy empowers you to make informed decisions across various aspects of personal finance, from budgeting to investment strategies. Armed with knowledge about financial products, services, and concepts, you can assess their options critically and choose the most suitable courses of action.

Achieving Financial Goals: Financial literacy enables individuals to set realistic financial goals and develop a roadmap. You can make steady progress towards achieving financial milestones by understanding your financial situation, identifying priorities, and implementing strategies aligned with your goals.

Financial Security: Financial literacy is instrumental in building a secure financial future. It equips you with the knowledge and skills necessary to weather financial storms, plan for emergencies, and invest for long-term financial well-being, enhancing overall financial security.

Debt Avoidance: Understanding the true cost of debt and responsible borrowing practices helps you avoid falling into the trap of high-interest debt. Financial literacy enables you to assess the risks and benefits of borrowing, make informed decisions about taking on debt, and adopt strategies to manage debt effectively.

BREAKING DOWN BARRIERS TO FINANCIAL LITERACY

The importance of financial literacy cannot be overstated, yet many individuals have a significant gap in financial knowledge. Several barriers contribute to this gap, making it challenging for people to access and understand essential financial concepts.

Lack of Financial Education: Formal education systems often lack a comprehensive financial literacy curriculum, leaving many individuals ill-equipped to navigate complex financial matters.

Financial Jargon: The financial industry is rife with jargon and technical terminology, which can be intimidating and inaccessible for those without a strong foundation in finance.

Socioeconomic Factors: Low-income communities often face barriers to accessing financial education and resources, exacerbating disparities in financial literacy.

BUILDING A FINANCIALLY LITERATE FUTURE

Building a financially literate future requires concerted efforts to address the existing gap in financial knowledge and empower individuals with the skills and resources they need to make informed financial decisions. Some solutions can be proposed.

Integrate Financial Education into Schools

Equipping young people with financial knowledge early on is essential for laying a strong foundation for their financial well-being. By integrating financial education into school curricula at all levels, from elementary to high school, students can learn key concepts such as budgeting, saving, investing, debt management, and basic economic principles.

This would bring out key benefits such as:

• Provision of universal access to financial education for all students, regardless of socioeconomic background.
• Fostering responsible financial behaviour from a young age, setting students up for long-term financial success.
• Helping students develop critical thinking skills and the ability to evaluate financial choices.

Develop Engaging Financial Literacy Programs

Creating engaging and interactive financial literacy programs is essential for making financial education accessible and enjoyable for learners of all ages. It is one of the main objectives of the Africa School of Entrepreneurship (ASoE), established in 2017. It remains a top objective for ASoE because these programs can include workshops, seminars, online courses, mobile apps, games, and other digital resources that cater to diverse learning styles and preferences.

This will, in effect:

• Increase engagement and retention of financial concepts through interactive and experiential learning experiences.
• Allow learners to access resources anytime, anywhere, using various devices.
• Address the challenge of financial jargon by breaking down complex concepts into digestible and relatable content.

Promote Financial Wellness Programs in the Workplace

Employers can play a pivotal role in promoting financial literacy among their employees by offering workplace-based financial wellness programs. These programs may include financial seminars, one-on-one counselling sessions, retirement planning workshops, and access to financial planning tools and resources.

These initiatives would:

• Enhance employee satisfaction, morale, and productivity by reducing financial stress and increasing financial confidence.
• Help attract and retain talent by offering valuable benefits that contribute to employees’ overall well-being.
• Contribute to a positive organisational culture that values employee development and financial wellness.

Organise Community Outreach Programs

Targeted community outreach programs are essential for reaching underserved populations and addressing disparities in financial literacy. These programs may involve partnerships with community organisations, local governments, and financial institutions to provide educational workshops, counselling services, and resources tailored to the community’s specific needs.

This would:

• Address barriers to financial literacy, such as limited access to resources and cultural or language barriers.
• Build trust and rapport within the community, fostering long-term relationships and ongoing support.
• Empower individuals and families to improve their financial well-being and achieve their financial goals.

NEXT STEPS

By implementing a combination of these solutions, we can bridge the gap in financial literacy and empower individuals of all ages and backgrounds to make informed financial decisions, build financial resilience, and achieve their long-term financial goals.

Promoting financial literacy is a collective effort that requires collaboration among policymakers, educators, employers, community leaders, and financial institutions to create a more financially literate society.

Financial literacy is the bedrock of financial empowerment and resilience. It is not a luxury but a fundamental skill that every individual deserves to possess. By investing in financial education, breaking down barriers to access, and fostering a culture of financial responsibility, we can create a more financially literate society where individuals can navigate financial challenges, seize opportunities, and achieve their financial aspirations.

Ultimately, promoting financial literacy is not just about improving individual outcomes but about building a stronger, more prosperous future for all. As we continue to advance efforts in this domain, let us remain committed to the vision of a world where financial literacy is universal, enabling ALL OF US to realise our full financial potential and secure brighter futures for ourselves and future generations.

I hope you found this article enjoyable. Your feedback is highly valued and appreciated. I welcome your suggestions for topics you want me to address or provide insights on. You can schedule a meeting with me at your convenience through my Calendly at calendly.com/maxwellampong. Alternatively, you may connect with me through various channels on my Linktree page at https://linktr.ee/themax.

This article is written for informational purposes only and is not intended as financial advice. The views and opinions expressed in this article are my own and do not necessarily reflect the official policy or position of any other agency, organisation, employer, or company. Assumptions made in the analysis within this article do not reflect the position of any entity other than mine.

Before making any financial decisions, consult with a qualified professional who can provide personalised advice and guidance based on your specific situation.

Source:B&ft

The Ghana Insurers Association (GIA) held its Annual General Assembly on December 14, 2023, to usher in a new era of leadership. With the conclusion of the tenure of the former Board led by Mr. Seth Kobla Aklasi, Managing Director of Donewell Insurance LTD., a new Board was elected for a two-year term. The election, widely regarded as one of the most fiercely contested in GIA’s history, featured both new candidates and those seeking re-election.

In a landmark inaugural ceremony held on Thursday, February 1, 2024, at the auditorium of the National Insurance Commission (NIC), key stakeholders from the Ghanaian insurance industry gathered to witness the transition of leadership. Attendees included leaders from industry bodies such as the Insurance Brokers Association of Ghana (IBAG), represented by Mr. Shaibu Ali, the Chartered Insurance Institute of Ghana, represented by Mr. Solomon Lartey, and the Ghana National Bureau of the ECOWAS Brown Card Scheme, represented by Mr. Benjamin Yamoah. Managing Directors and Chief Executive Officers from member insurance companies also graced the occasion, with the event chaired by the Acting Commissioner of Insurance, Mr. Michael Kofi Andoh.

Mr. Seth Kobla Aklasi, the re-elected President, expressed gratitude to the Association for the opportunity to serve an additional term, citing it as a testament to the confidence vested in the outgoing Board. He acknowledged the commitment of the previous Board in navigating challenges, such as the Domestic Debt Exchange Programme (DDEP) and taxation on non-life insurance policies proposed by the government.

Aklasi highlighted positive accomplishments during the previous tenure, including collaborative efforts with industry bodies, contributing to improved key indices as reported by the NIC’s “Public Perception and Confidence of Insurance in Ghana (Phase IV) Research Report.” Notable achievements included an average confidence index of 61.65%, an improved perception index of 53.3%, basic knowledge in insurance among 75% of the sampled population, and a basic understanding of insurance by 83%.

Looking ahead, Aklasi outlined key projects aimed at advancing industry growth, such as establishing a claims database to combat fraudulent claims and implementing data-backed pricing strategies for more liquid insurance companies capable of meeting legitimate claims promptly.

The President expressed optimism that the recent closely contested elections and increased interest in the Association would serve as a catalyst for a positive change in the industry’s attitude. He urged members, stakeholders, and the industry at large to collaborate for mutual benefit and contribute to the overall progress of the insurance sector in Ghana.

Mr. Majid Michel was very deligthed when our client relations team gave him a surprise on his birthday. He received a beautiful gift hamper to show how much he is appreciated as a valuable customer

The National Insurance Commission, in partnership with its approved companies and the National Blood Bank embarked on this life saving initiative in its efforts to stock the blood bank.

First Insurance Company Limited, a life insurance underwriter, has paid an amount of GH¢204,000, 40 percent on a GH¢510,000 sum assured, in claims to a single policyholder. The claimant who applied for a critical illness claim earlier this year, has been with the company since October 2019. However, after developing a critical illness in 2020 and subject to medical examination, the customer has received 40 percent on the sum assured amount of GH¢510,000 from the life insurer, a record figure in the company’s claims book. “After assessment, we found the claim to be genuine and as a company that honours our promises to the client, we are paying GH¢204,000 to the claimant.

We believe in providing comprehensive cover for our customers and making sure that we are always there for them whenever the need arises,” says First Insurance’s Executive Director, Kwame Sarpong. “If you look at when the policy started and the amount the policyholder is getting, in insurance terms, the claimant is getting much more than what was put in. And that is what we want to be known for,” adds Enoch Chokoto, Executive Head, Underwriting.

As a company, Mr. Sarpong said First Insurance was committed to prompt claims payment and that once all necessary documents are met, it takes a matter of days to effect payment. Mr. Sarpong noted that life insurance penetration was still relatively low in the country despite its importance and that apart from insurers honouring claim promises, massive public education and sensitisation is needed to boost confidence among the insuring public. With the advent of modern means of communication like the internet, specifically social media, he said more needs to be done by insurers and regulators in order to reach out to a critical mass of the population. He further revealed that his outfit is currently working with stakeholders, including the media, to rollout public education programmes on the importance of buying the right life insurance policies.

The First Insurance Company (FIC) Limited on August 29, presented a cheque for GH¢40,000 to the family of a deceased client at Santa Marie in Accra. Presenting the cheque to the family, a Senior Executive Officer, Mr Benjamin Bortketey Annang, said life insurance policy was not only important to the client’s life but that of his or her family as well. According to him, nobody had control over his or life and that life insurance policies were there to reduce the financial burdens “that are associated with deaths”, particularly to the bereaved families. Claims payment He said many people had erroneous perceptions that insurance companies did not pay their claims or they delayed in settling claims.

Mr Annang noted that First Insurance Company was one of the companies that did not waste time in paying claims to policy beneficiaries. He said earlier this year, the company presented a cheque for GH¢150,272 to the family of a deceased client in Kumasi whom he described as a good ambassador and a friend of the company, pointing out that although the client was dead, the relationship between the company and the family would continue. Mr Annang, therefore, urged the family of their deceased client to continue to do business with the company and also use their claim judiciary to take care of the children left behind by their client. He said their client signed on to their policy to secure a better future for her children.

Relationship
He consoled the family on their loss and assured them that the company would not desert them during their bereavement. “We want to assure you that we are grieving with you,” Mr Annang said, noting that the company developed life-long relationship with their clients. Dr Richard Arthur, the brother of the deceased, who received the cheque on behalf of the family, expressed his gratitude to the company for the timeliness with which it pays claims. According to him, the family was not expecting the company to pay the claims as early as they did.
He, therefore, pledged to be an advocate for their good deeds. “From what I have witnessed today, it’s going to be an advertising for you,” he assured the company.

Education
The Executive Head of Programmes, Mrs Elsy Adadey, expressed concern over the low penetration rate of life insurance in the country in spite of the several benefits associated with the policy. She also expressed worry over the misinformation some insurance agents presented to their prospective clients during policy signing. According to her, many agents of insurance companies did not explain insurance policies well to their prospective clients, hence resulting in situations that break trust between insurance companies and their clients.
Quality service
“We are passionate about providing quality services that create stakeholder confidence and trust,” Mrs Adadey said, adding that “we explore innovative ways to deliver superior client experience.” She said the company’s mission was to help middle income families become adequately protected and financially independent when death claimed their breadwinner. The First Insurance Company Limited, a private limited liability company incorporated under the laws of Ghana and licensed by the National Insurance Commission as a life insurer, offers unique life insurance products to the Ghanaian public.