In an exciting collaboration between Minet Malawi, Britam, and The Daily Times - Malawi's leading newspaper - we are thrilled to introduce a groundbreaking initiative that will redefine your Wednesdays. Welcome to the Insurance Insights Column – a weekly rendezvous with the world of insurance and contemporary issues that matter. Every article aims to illuminate the intricate landscape of insurance products and relevant topics that impact us all. The articles will be educative at all levels, catering to both practitioners and non-practitioners.
As published in The Daily Times (Malawi) on May 29nd, 2024
An insurance company that considers itself to be truly market driven use distribution channels that reflect the way that its customers want to interact with it. Malawi, as an insurance market, is broker-driven, where more than eighty-five per cent of insurance business is serviced by and through intermediaries, principally brokers. No insurance company in Malawi market can do without brokers. You avoid brokers at your own peril.
For starters, a distribution channel is the means by which insurance products and services are provided to customers and encompasses entirety of a company’s marketing network.
For example, in life assurance, depending on whether an assurer is attempting to build its own agency sales force, intermediaries can be identified in two broad classes. Many life assurance companies have what we refer to as agency-building distribution strategy. Under the strategy, a company recruits, trains, finances, houses and supervises its agents.
Some companies prefer the opposite - that is, non-agency building distribution strategy. Such companies do not seek to build their own agency sales force. Instead they rely on established brokers for their sales. This is common among general insurers.
Apart from avoiding expenses associated with training, housing and providing other facilities, insurers that rely on established intermediaries tend to have better and seamless service delivery than those who exclusively depend on their own agents.
As aforementioned, an insurer’s success depends, inter alia, on brokers’ knowledge of its products and services. Insurance is a highly technical subject. For one to market insurance to insuring public with success, one requires mastery of terminology and concepts. There are no short cuts about this fact.
In today’s column, we discuss key insurance terminologies and concepts used in life insurance. In commerce, before one buys a product or service, one needs to have clear understanding of the product on offer. You need to know the product that you are buying, how the product differs from other products on offer and the level of utility you will derive from the product.
A man in the street knows that life insurance companies sell nothing but policies that pays up when an insured life dies. For him that is the end of the story. Verily, verily I say unto you, life insurers sell a variety of products, each offering dissimilar purpose.
A life insurance policy that provides cover for the whole of an insured’s life is called whole life insurance. A policy that covers a set time period, such as five or ten years, is called term life insurance or endowment cover.
In essence, endowment insurance differs from term insurance. Whereas term insurance policies promise to pay benefits if the insured life dies during a policy term, endowment policy pays benefits if the insured dies during the policy term and also pays benefits if the insured survives the policy term. Term policy compensates legal representatives only if a life has been lost. Insurance people refer to term policies as risk-based covers. Endowments are both risk and savings-based policies.
If you want to collect the insurance benefit yourself, you go for endowment policy. But, as a bread winner of the house, if you want to leave your family members with something in case of death, it is recommended that you go for whole life insurance policy.
An annuity, on the other hand, is a contract that promises to pay the insured party a periodic payment starting at a specified age, usually retirement age - 60 in the case of Malawi. Insurance people refer to the insured party as an annuitant. If payments cease on annuitant’s death, we call the contract a life annuity.
Life insurers also offer health insurance. Health insurance is a form of policy whose payment is contingent on the insured party incurring additional expenses or losing income because of incapacity or loss of good health. This is commonly referred to as critical illness insurance.
However, if the insured incurs hospital or health care expenses, it is called medical expense insurance. Medical expense insurance is provided by specialist service providers. In Malawi, there are about six in number. Suffice to mention that some corporate employers have in-house schemes which they run in agreement with health care providers or hospitals for the benefit of their employees.
Credit insurance is another common product offered by life insurance companies. Credit insurance is issued through lending institutions to cover debtors’ obligations if they die or become disabled.
In all cases mentioned above, premiums, which are referred to as contributions, are usually payable monthly.
Views from the top are that many people do not have personal life insurance and medical expense policies due to lack of information concerning the products. Talk to us. We are here to serve.
Comments
Post a Comment