Abstract

In Nigeria the issue of taking life assurance policy has been neglected in the sense that at this presence time, it is estimated that not up to two percent (2%) of Nigerians own life assurance policies due to poor education and inappropriate marketing strategies for this fact, the benefits and role life assurance plays in this country is being viewed from a very crooked point thereby making it slightly visible.This study therefore focuses on marketing of life assurance policies in Nigeria. The population of the study comprises both staff and customers of Leadway Assurance Plc Enugu. A sample size of fifty (50) was selected made up of 20 staff and 30 customers. Both primary and secondary data were collected. Questionnaire coupled with personal interviews were the main research instrument. The data was analyzed by the use of chi-square statistical method.The study came out that insurance companies in Enugu state (Leadway Assurance) exercise their marketing functions and strategy mainly through advertising and sales promotions as a guide to customer profit motive and competitive tool. It was recommended that insurance companies should endeavor to establish a monthly publication. Such publication will serve as strong public relations machineries in promoting the image of insurance industry.

CHAPTER ONE

INTRODUCTION

1.1      Background of the study

In Nigeria, the issue of taking life assurance policy has been neglected, in the sense that at this presence time, it is estimated that not up to two percent (2%) of Nigerians own life assurance policies. For this fact, the benefits and roles life assurance plays in this country is being viewed from a very crooked point thereby making it slightly visible.Life insurance consumption is the demand for life insurance products such as whole life policy, term policy, endowment policy and annuities. Life insurance companies are financial intermediaries that bring together the surplus spending unit (insured) and the deficit spending unit (insurer) for the purpose of the insurer protecting the financial interest of the beneficiary in the event of the demise of the insured. In this process life insurance companies act as a vehicle for the mobilization of savings for long term investment purpose, leading to economic growth and development. Through financial intermediation, life insurance product has become a key source of long term finance, encouraging the development of capital markets (Catalan et al 2000; Impavido and Musalem 2000). Indeed several studies have found evidence that the development of the insurance sector is related to economic growth and key elements in the economic development of a country (Ward and Zurbruegg 2000; Webb, 2000 and Soo, 1996). It is thus expedient for a country like Nigeria that has witnessed a prolonged period of recession and macro-economic instability to initiate a strong financial market via life insurance companies for economic recovery. There is indeed an urgent need to propel the life insurance segment to increase financial intermediation that will stimulate the growth of domestic output, minimize the rate of inflation, reduce rate of unemployment and attract foreign direct investment needed for economic development.Every man wants to make good in life and probably live long enough to enjoy all that life has to offer, but it is rather a painful paradox that man‘s longevity remains the exclusive preserve of God Almighty. Even at better climes, where medical sciences have helped to improve the life expectancy of the people to an appreciable degree, fate still plays the final arbiter. But the irony however is that this uncertainty over man‘s fatality is probably what an industry like the insurance sub-sector thrives upon. Among the numerous services on offer at most insurance companies worldwide, is the life insurance policy. The life insurance policy, as the name implies provides a capital payable at death to the beneficiaries of the life assured. It is an aged long development when there was need to get security for humankind In the opinion of Arodiogbu (2005), ―humans have, from time immemorial, always sought security. This was perhaps the reason for the formation of families, clans, tribes, and other groups. Humans today have continued their quest to achieve security and reduce uncertainty because in some way we are still more vulnerable today than our ancestors‖. Besides, the physical and economic security formally provided by the tribes or extended families have diminished with industrialization, our income-dependent, wealth-acquiring life style renders us and our families more vulnerable to environmental and societal changes over which we have no control (Black and Skipper, 2005). Consequently, more formalized means are required for mitigating the adverse consequences of events and conditions ranging from unemployment, loss of health, death, old age, law suits, and destruction of our properties, and many other perils all of which are events that we cannot predict or completely prevent, but we can only provide for their financial effect, and the only way to doing that is through insurance. The insurance Act 2003 grouped insurance into two broad classes of life and non-life or general insurance business. This paper is on the life insurance business. The life arm of insurance business include all insurance that pays benefits on a person‘s death, living for a certain length of time, incapacity, and injury or incurring a disease (Arodiogbu, 2005). In today‘s harsh and risk-prone habitation environment, every life is vulnerable to any of the above named peril either in the short run or in the long run, and this has given life insurance business a rising visibility. This is because of the role it has to play in mitigating the adverse effect of the event on the people and the economy. According to Naeche (2010:2): The future of life insurance business in Nigeria is very bright and life market was going to drive the economy in the nearest future considering the nation’s large population …, it will play a leading role in the financial services industry and … serves as financial intermediaries between investors and economic agents that lack sufficient financing. These economic agents may be households, businesses and governments. It emergence as financial intermediaries, with features different from those of banks as regards the time frame of investments, makes a major contribution to the development of the financial markets and the economy at large.Moreover, the life assurance industry has entered on era of accelerated change as a result of increased competition in the products and pricing within all the insurance sectors. Hence professional marketing management is now a prerequisite, if a company is to return or advance its position in the competitive hierarchy they must follow suitHowever, before choosing the kind of cover to take, the intending assured should first of all sit down and analyzed his need. Life assurance has been said to be for those who live too long and those who die too soon. The needs of people in both these categories can be met.  Most salary earners and wage earners have other people depending on them, it could be parents, a wife, children or even brothers and sister. In life assurance programs, funds are accumulated  through payments made by the assured person called premium so that, should death occur, prior to a specified date or upon survival at an agreed period funds would be made available from the scheme to pay whatever benefits that are due.

        The idea of assistance and association is not new to the Nigerian society. Various town and clan unions and social dubs, have various ways of showing benevolence to their bereaved members as discussed earlier. It is customary for people to pay condolence visit and present a sympathy purse. These practices are similar to mutual life assurance.

        However, life assurance as practiced today is part of the nation’s colonial heritage. Obviously, the British introduced life assurance into Nigeria, hence the practice closely follows, the British pattern.      The earliest colonial insurance interest in Nigeria was directed to the general insurance of goods and cargo.

Few life businesses which tricked in were referred to British Home Officers in London for processing. Only the affluent could afford it then because it was considered as enormous risk to insure person living in the tropics and the cost of providing such life cover was very expensive and uneconomical.

With independent in 1960, life assurance started to change. Lead way Assurance Company was incorporated between Nigerians and expatriates. It therefore became the life specialist’s underwriter. Within the same period, the Nigerian life and pension consultants together with the Nigeria universities management consultant indicated the development of group life and pensions scheme in Nigeria. Before 1960, many Nigerians shunned the idea of effecting life assurance cover. They felt generally that the insurance agents were wishing them bad-luck, premature death and therefore would never have anything to do with the insurance and their agents.

1.2         Statement of the Problem

a)   Lack of statistics which result to problem in payment of benefits.

b)   Inability by insurance marketer to design policies which will meet the current change in the society.

c)   The effect of insurance image in Nigeria due to tribalism, religions strife etc.

d)   The low demand for life assurance policy which could be attributed to lack or poor education and inappropriate marketing strategies.

All have contributed to the problem which tends to impede development of life assurance in the Nigeria society.

1.3    Objective of the Study

        Having been exposed to the problems, we have to look into what the researcher intend to achieve which is as follows;

a)   To provide a new statistical method that will enhance payment of benefit

b)   To identify those policies that suits the current demand in the society

c)   To promote insurance image and enhance inhabitance co-existence in the society

d)   To provide a strategic method in marketing life assurance polices and promotes public awareness.

1.4    Research Questions

1.  Are there any method used in valuing payment of benefit?

2.   Does the organization carry out marketing research to know the current trends of an event in the society?

3.   Does socio-cultural beliefs of the society affect the operation of life assurance policy?

4.   Does lack of public awareness hinder the activities of life assurance?

1.5    Research Hypothesis

H0:  Insurance companies have no strategic method inmarketing life assurance policy.

H1:  insurance companies have strategic method inmarketing life assurance policy.

H0:socio-cultural beliefs of the society do not affect the operation of life assurance policy

H2:socio-cultural beliefs of the society affect the operation of life assurance policy

1.6    Significance of Study

        The study of the problems facing marketing of life assurance companies is significant in many ways, especially to the insurers, the life assurance intermediary and the insuring public.

        Hence at the end of this study, the insurers and the life assurance intermediaries will be able to identify the problem militating against the effective marketing of life policy in the society. The study is also meant to highlight the need for adequate sales promotion methods, advertising principles and understanding of the life assurance policy.

        Finally, it points out the need for marketers in the life assurance industry to appreciate the concepts, strategies and application of marketing as a spring board for growth and also the need for them to work with the actuaries of the life policies to specific target markets

1.7 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers marketing of life assurance policies in Nigeria. But in the cause of the study, there were some factors which limited the scope of the study which were beyond the control of the researcher;

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study       

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

C) Finance: finance is one of the limitations to study. The researcher is facing financial constraint to meet the all the needed educational requirements including this research study.

1.7 OPERATIONAL DEFINITION OF TERMS

Insurance

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss

Insurance policy

Insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay

Life assurance

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person

Life assurance policy

Life assurance policy is a contract between aninsurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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