Causes of surrender; The insurers’ challenges

One of the factors is the frustration that insurers go through with third party premium deduction sources (pay points) such as the banks and the Controller and Accountant-General’s Department (CAGD), among others.

For example, some policyholders are indirectly frustrated by third party deduction sources and then insurers are made to take the blame and bear the brunt. 

This typically happens when there are over-deduction of premiums from the pay points. This is a subject I would later bring readers up to speed on, providing some insight on how some of the pay points make insurers helpless in the sight of their policyholders. 

Life Insurance is similar to and supplements SSNIT Contributions

It is not for nothing that the Social Security and National Insurance Trust (SSNIT) does not allow access to one’s contributions till after a voluntary retirement age of 55 when a worker has contributed for a certain number of months or when he retires compulsorily at age 60. Fortunately, this is statutory and provides an undoubtedly disciplined way of planning towards one’s retirement and the full amount paid in gratuities or annuities as he or she may desire. 

Can you imagine the amount of surrenders and partial withdrawals SSNIT would be paying should the flood gates be opened for workers? Can you imagine the effects that would have on all stakeholders involved including the workers themselves and their future? It is tantamount to sacrificing one’s future comfort for the present ‘nokofio’. 

Effects of surrenders

Surrendering in any form takes away the full or part of the expected pie one is entitled to at maturity; hence should not be encouraged. If one understands the stance of SSNIT, then it should be easier to tighten our wallets a little bit pending the “rainy day”. When policyholders surrender their policies, all stakeholders are affected. 

First, the insurer loses a client and ultimately future premiums. The agent loses commission and is unable to pay tax on those commissions he or she should have earned on such policies; hence, the state loses revenue. The sales manager may lose such an agent, and the other clients of the agent will also not receive the best of services. Simply put, the devastating consequence is cyclical!

Who is really affected?

Notwithstanding the fact that all other stakeholders would be hard hit, I think that the ultimate ‘victim’ of a partial or full surrender is the policyholder himself or herself. The reason is that surrendering at such times may only relieve one of a temporary financial obligation while worsening a more sustainable future comfort. If policyholders are able to hold themselves the same way they hold themselves ‘against’ SSNIT, they would be doing themselves a lot of good.

Responsibilities of Insurers and policyholders

Yes, life insurers have a responsibility to ensure that all challenges posed to policyholders who would wish to fully surrender / cancel their policies are dealt with. Key among these responsibilities is the routine training of their sales force to minimise the level of mis-selling. Ethical standards must be strictly adhered to. Similarly, some policyholders have also cited the attitudes of some front desk officers in addressing their needs, especially telephone etiquette, unprofessional attitude and wanton disregard for the sensibilities or concerns of policyholders. I have personally witnessed Chief Executive Officers intervening in instances like this to calm nerves! Sometimes it is a scene to behold. 

Adequate and regular training on product knowledge should be a standard and should not be compromised, since a well informed staff delivers better quality service. I have witnessed a customer service officer tell a policyholder to the face that ‘if that is what the agent has told you, then that is your own problem because as far as I am concerned, this policy does not cover assault on you’. 

There could have been a more professional way to handle this than applying the rule book. If such a person even has the heart of the most patient person on earth, I am sure no amount of words can make him or her change the mind. Training, Training, Training and proper evaluation of what staff have been trained on remains the bottom line here. 

The responsibility of policyholders

The challenges posed by life insurers notwithstanding, these should not take away the onus on the policyholder to pay attention to the customer service officers when they have the opportunity of doing so. This is in view of the fact that, however hard some sales agents are trained by management, they continue doing the wrong thing(s) in order to ‘cut corners’. 

If the aggrieved policyholders pay more attention to what the customer service officers may tell them, they get better educated and have an in-depth understanding on the realities of the policy terms and conditions with better expectation of what they stand to benefit if they let go of their anger against the insurer, the pay source or the agent.

Availability of other options

Most life insurers offer partial surrenders / withdrawals while they still keep their policies in force. Others access policy loans and still continue with the policy. If policyholders ride on the back of harsh economic conditions to surrender fully, they should remember that the ‘harsh’ macro-economic conditions are good enough reasons to, as it were, be financially more disciplined, especially towards the future and other mishaps that may befall them along the way. 

Policyholders should also know that access to humongous loan amounts to the detriment of having a continued life insurance policy, may only ameliorate the ‘pain of their wounds, but not heal their wounds’. 

The way forward

From the foregoing, it can be concluded that the main reasons for fully surrendering policies before maturity may not necessarily be the harsh economic conditions, but include such issues as the service quality level of insurers; deceitful ways of some insurance sales agents; challenges from pay sources; peer pressure, etc. 

It is the responsibility of all stakeholders to keep the policies in the life insurance books, support the industry and consequently increase the insurance penetration rate in Ghana. It is imperative for policyholders to mirror themselves, say, in the next 10, 15 or 25 years, and ascertain whether they would prefer to continue to service personal loans or rather commit to a lifetime insurance policy with appreciable future returns. 

Akin to the ground rules of SSNIT, a policyholder should even not be encouraged to take partial surrenders or policy loans, as they end up depleting their own investments, and therefore become vulnerable to future financial challenges. In other words, ‘you cannot touch it till it is due!’

The relationship between an insurance policyholder and insurers should be likened to that of marriage. There may be good times and not too good times, but understanding each other’s challenges makes it better in the long run.

If the situation really demands it, why surrender all?

Till we meet again next week, this is ‘Insurance from the eyes of my mind”. 

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