Assessment of the Factors Affecting the Uptake of the Life Insurance Policy in Uganda: A Case Study of SANLAM Insurance Ltd, Uganda.
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Life insurance is contract in which one party (the insurer), in consideration of a specified amount (premium), either in lump sum or in form of any other periodical payments, in return agrees to pay to another party (the assured), or to the person for whose benefit the policy is taken, a stated sum of money upon occurrence of a tragedy. Besides its importance, life insurance penetration and uptake in Uganda is less than 1%. The low penetration rate and uptake of life insurance has however been cited to be caused by a number of factors. So the current study sought to assess factors affecting uptake of the life insurance policy in Uganda, focusing on Sanlam insurance as a case study. The study specifically ascertained the degree of life insurance uptake in terms of demographic structures, examined the extent to which consumer attitudes affects the uptake of life insurance and assessed socio-economic factors limiting the uptake of life insurance cover in Uganda. A cross-sectional design with qualitative and quantitative methods was used in collecting data from 155 respondents. The study revealed that life insurance in Uganda is low because many people are hindered by a number of factors ranging from socio-demographic factors, attitudes and socio-economic factors particularly the financial constraints. Socio-demographic factors such as age, gender, education, occupation and marital status greatly affects uptake of the policy. The uptake is also influenced by consumer attitudes for instance, many do not trust life insurance providers, many fear to lose money in premium in case they do not become sick since most medical premiums cannot be refunded unless a strategy occurs. It was also found that there are high levels of ignorance about the benefits of life insurance among many Ugandans. There are also high levels of financial illiteracy among the low income earners; therefore marketers of life insurance services targeting these groups are often confronted with the challenge of convincing them to embrace life insurance and its associated benefits. Besides this, socio-economic factors such as affordability of life insurance, difference in occupation, difference in income levels; difference in family size for instance dependence level by other people, difference in social security savings among others are greatly affects the uptake of life insurance in Uganda. The study therefore confirmed that low uptake of life insurance and its products is partially due to low awareness and affordability which has caused a lot of ignorance about the policy, hence the study recommends for vigorous sensitizations of the public. The government of Uganda also needs to intervene for reduction of life insurance premiums so as they can be affordable to all classes.
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