Investopedia describes life insurance as “protection against financial loss that would result from the premature death of an insured. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. The death benefit is paid by a life insurer in consideration for premium payments made by the insured.”
Imagine you bought yourself that very expensive dream car that you have been fantasizing about for years. What would you do if you knew, on the day you bought it, that without a shadow of a doubt you would be involved in an accident in it one day? Imagine you also knew that, while you would survive the accident unscathed, the accident would leave your car a total write off? Given the option, and having glimpsed into the future, would you drive around the streets of Lusaka without car insurance? Would you run the risk of having to replace the car out of your own pocket once that happened? It would be quite absurd to choose to run the risk of driving a very expensive uninsured car, especially here in Zambia where the accident rate is very high and the drivers are… unpredictable! (To say the least)
Let’s turn that analogy around and imagine that the expensive car in our example is actually your own life… except you don’t survive your own death! Instead the survivor in this case would be the people who depend on you financially. How much more valuable is a human life to that of a car’s? While your brand new Audi (In my case :D) might not ever be involved in an accident, death is one of life’s certainties, “Death and taxes” as the popular expression goes.
Since life insurance is so important, why are Zambians so reluctant or so non-chalant about putting life insurance in place? Part of the reason for this would be because of our extended family culture. Because if I’m not here then my family will take care of my children right? While this is an admirable part of our culture, it is certainly not bullet proof.
Being in the financial services industry, it’s quite interesting for me to see the contrasting urgency that expatriates and Zambians put on life insurance. I have met a number of top professionals in the insurance industry and came to notice that a number of them are Zimbabwean. I asked one of them once why so many Zimbabweans seemed to be at the fore of Zambia’s insurance industry and they told me that the stage at which Zambia’s insurance sector is at now is probably where Zimbabwe was 20 years ago!
Life insurance may not be the right option for everyone but it’s certainly a key piece to be considered in your financial portfolio. It’s either that, or drive your shiny new sports car uninsured.