By NIKE POPOOLA

Mr. Femi Asenuga is the managing director and chief executive officer of Mutual Benefits Life Assurance Limited, a subsidiary of Mutual Benefits Assurance Plc. He tells NIKE POPOOLA how to address the challenges confronting major life insurance policies in the country

What are the features of life insurance products?

Life insurance products generally have protection and investment features that guarantee the policy owner or his dependants an assured sum of money at maturity date or if death occurs. For protection products, you pay a small premium for an agreed benefit over an occurrence mostly death. But most times, people don’t want to die before they get benefits. Because people also look for what they can get while still alive, life insurance also introduces investment policies. That is why we have many life insurance products today that provide protection and investment plans combined.

What other things should people know about insurance?

If you are working and you have assets but you don’t have insurance, you need to know that it is relevant that you should protect what you have. It is in Nigeria that we find cars been stolen and we see people who will be contributing for the person to replace his car, it is totally unnecessary, it is in Nigeria we find motorists who hit themselves and then block the highway and be exchanging blows, this is uncalled for. With insurance, your insurer will take the financial responsibility for all these losses. People need to know that insurance is relevant to them.

Why is the level of awareness of annuity low among pensioners?

The 2004 Pension Reform Act provides that a pensioner can use his retirement savings to buy annuity when he retires. This will guarantee him constant income for his lifetime when he is no longer in active service. I think the level of awareness and patronage of the annuity has a lot to do with how the pension scheme started. The workers have always known the Pension Fund Administrators before they heard of annuity, even though it is annuity that guarantees the pensioner constant income till he dies. With programmed withdrawal which is sold by the PFAs, the pensioner gets regular income for an agreed time period. I think this is a major flaw because the intention of the law is to ensure that people continue to receive income till their last day and that is how annuity works.

How can the compulsory insurance policies be efficiently enforced by the industry?

There are penalties for non-compliance. We should have people who are monitoring compliance and let people know that the government and operators are serious about ensuring these insurance policies are in place. Let there be more publicity on the benefits and penalties. The level of compliance is usually very good for large companies, though not 100 per cent, let us take the awareness to big corporate companies; the level of awareness is low with small companies. We need to preach the benefits, let them see why they need to buy it voluntarily so that they will be able to patronize it happily. No matter any approach used, if it is not backed by sanctions, it will affect the compliance because some people can be difficult complying at times.

What can be done to ensure proper implementation of the Federal Government’s group life scheme?

Government sets the pace in the economy, it is part of the responsibility of the government to ensure that businesses are well, okay and financial institutions are strong because this will have a lot of implication on the economy, I think government should also ensure the patronage of local insurance companies to enable the local firms to compete better globally. The scheme should be well supervised; there should be even consideration of all the companies in the business, according to their strength. If there is equitable sharing of the group life business among member companies were parameters such as premium income or shareholders funds are considered, there would be better satisfaction, it should not be based on unfairness and favoritism.

What are the developments in Mutual Life?

We are a subsidiary of Mutual Benefits Group, most of our programs are programs of the group, we don’t operate separately on our own, we are fully together with Mutual Benefits Assurance Plc. At Mutual Life, we are developing our market, we exist for the benefits of our various customers, we have continued to be innovative, we are always evolving products, and very soon we will be coming into the market with new products. We offer life products that cater for the changing needs of our clients. Our products range from statutory corporate insurance requirements, investment policies, education plans, annuity plans among others.

What are some of the policies?

We have a number of products, for instance, the individual savings and protection plan, Mutual term assurance, personal pension plan, group life policy among others. The Term Assurance Policy is a life policy that pays out a lump sum according to the sum assured in the event of the policyholder’s death, thus protecting loved ones against financial hardship. There is the Loan Protection Scheme Policy that ensures that prospective creditors are protected from losses occasioned by the death of a debtor who is also a policy holder. The cover provided is on a reducing balance basis. This means that at every point in the duration of the policy, the lender is protected to the limit of the balance of the loan outstanding. The lender automatically receives the balance of the outstanding loan from MUTUAL, should the borrower die before full repayment of the loan.

What kind of policies will encourage savings and investment?

There is the Personal Pension and Investment Plan, which is targeted towards different individuals, people in self employment or various organizations. It is equally beneficial to people in paid employment, artisans and other vocations and trades. The plan encourages long term savings targeted towards future needs which may range from income in retirement to capital build up for specific future projects. There is the Individual Savings and Protection Plan, which is an anti-Inflationary savings and income protection plan designed for individuals whether self employed or working in paid employment to assist in cultivating the habit of regular and compulsory savings during their working years. The Green Shield Protection Plan is designed for safeguarding your loved ones’ financial future. With your family depending on you, it’s important to think about what would happen if they had nobody around to provide for them financially. These policies attract lump sum of money assured to the policy holder at the maturity date.

How do these policies impact on the lives of the average citizens?

We are ensuring poverty eradication because a lot of children drop out of school when they lost their breadwinners, dependants go through unnecessary stress when they lose their parents. With life insurance, we help to build savings culture. You can have long term or medium term savings and before you know it, you have a lot in your account which will be useful for you in future. Again, these life insurance policies guarantee you tax deduction from your taxable income.

How does the policy owner benefit a tax deduction?

We have a lot of customers who patronize us not just because of insurance benefits but because they can show evidence of paying life insurance policy to reduce their taxable income. We have many customers from different sectors such as the oil and gas, telecoms, banking. For instance, if you are paying 10 per cent tax on your income, with life insurance, the tax you pay may be reduced to about five per cent depending on the value of your policy, by this; you enjoy both life insurance benefits and tax deduction. It is part of our tax requirement in Nigeria and it is an international practice. All over the world, life insurance is been tax deductive. A lot of people from the cooperate world patronize life policy for this reason.

What is the way forward for the industry?

The future is very bright for life insurance in this country. I am interested in seeing a growing level of life insurance awareness in this country. Many people are becoming more financially responsible and there is a need for them to know the roles that life insurance can play in their lives. Operators too, we need quality man power in the Nigerian insurance industry that are well exposed, educated with good understanding, because insurance profession is not very simple. We need to be able to attract the kind of people that will move the industry forward. Here in Mutual Benefits, we employ high caliber of people because people matter in the success of any business.

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Source: Punch