Onifade: Life Insurance Could be Solution to Alleviating Poverty in Nigeria

Globally, the topic of financial inclusion has been touted as a panacea to poverty. In Nigeria, the Financial Inclusion Strategy was set up in 2012 to increase access to finance to 80 per cent of the adult population. Nine years after, it appears there is still a lot more to do to reach the mark. In this interview, the Managing Director/CEO of the specialist and digital life insurance company, Heirs Life Assurance Limited, Niyi Onifade, shares his thoughts on the subject and the role life insurance and his company, play in advancing the vision of financial inclusion, and provision of safety net for Nigeria’s middleclass. Eromosele Abiodun presents the excerpts

As a finance and insurance expert, how important is financial inclusion to the economic growth of the country?
We should start with an agreement on what financial inclusion means. It is simply a deliberate action to ensure that people, regardless of their income, class, or gender, have access to affordable financial products and services that meet their needs. This therefore translates to the removal of those barriers that are preventing people and businesses from having access to financial products and services such as savings, credit, payments, and of course, insurance.

The World Bank says that 1.7 billion people across the world lack access to basic financial services. Most of these people are said to be living in developing countries like ours and more than half of them are women. Just think about that for a moment. It means that these financially excluded people lack access to savings, they find it hard to receive payments, it is difficult for them to make payments for supplies, and making financial plans for their future and the future of their children is practically impossible. Imagine the pains they must be facing.

At the critical level, the barriers with financial inclusion are of two parts. On one part are the supply side barriers and on the other side are the demand side barriers to financial products and services. Supply side barriers have to do with issues such as distribution inefficiencies, inefficient regulation, complex products, difficult processes, unfriendly terms and conditions, and so forth. The demand side barriers include lack of awareness, financial illiteracy, affordability issues, and many more.
So, in a nutshell, financial inclusion is very important because it serves as a catalyst, a great enabler, for prosperity and poverty reduction, most especially in a country like Nigeria.

How can life insurance play a significant role in achieving this vision of financial inclusion and what is your company doing in that regard?
I see life insurance as a key to unlocking prosperity. In its basic form, life insurance replaces the income of the breadwinner if he or she passes away. In other words, the dependants continue to live comfortably even in the absence of the breadwinner, simply because of the financial plan that has been made in advance through life insurance. But life insurance goes beyond that.

It equally helps people to plan for everything from long term financial goals to financial emergencies. It is a very important tool for saving towards retirement, future financial projects, children’s education and so forth. As a people-friendly specialist life insurance company, Heirs Life is on a mission to making life insurance accessible to all Nigerians. Our purpose is to impact lives and transform the country. That is why we have come with the promise of fulfilling people’s financial dreams. We provide Nigerians with simple, quick, reliable, and accessible life insurance by leveraging technology.

We have a bouquet of simple products to meet different needs that people have, and we ensure that every interaction with us is fully enjoyed. We understand that inclusion must cut across pricing and access, so we provide people with target savings and life insurance products that are very affordable and sustainable too. With as little as a N100 a month, for example, you can get a life insurance cover of up to N100,000 from us. In addition to all this, we take financial literacy seriously by educating Nigerians on how life insurance can assist them to fulfill their dreams. That is why you often hear us say things like “simple life is here” and “tell us your dreams”. All you need do is tell us your dreams and we will work with you to achieve them.

There have been several literatures that point to savings as a means of attaining this financial security you have talked about. To what extent do you agree with this?
We all dream of different things like good education for our children, a holiday in the Caribbean, a fancy car, house, a society wedding, a small business we can call our own, or a befitting retirement. All these require money and they can be achieved with a disciplined approach to savings.

At Heirs Life, we have different target savings products that allow people to save towards their financial projects and at the same time enjoy life insurance protection. What that means is whether you remain alive or pass away, your financial objectives would be met. For example, MyHeirs Plan is a children’s education product that allows you to put money aside for the future education of your child. On an agreed future date, a payment is made to fulfil your dream of a good education for your child, so you don’t have to worry about how to pay school fees. Should death occur before the chosen future date, we will ensure that a pre-agreed life insurance benefit is paid along with your accumulated savings to fund the education of that child.

The events of last year have also taught everyone the importance of saving and investing for the rainy days. No doubt, a good savings habit shields one from financial agonies if an emergency shows up.

We must not also forget to give priority to our old age. A time will come in our lives when we are unable to jump up and down as we do today. At that time, we should not be depending on anyone to survive. We must actively prepare for retirement by saving and investing. This way, our retirement will be sweeter. That’s why Heirs Life’s pension regulated Annuity plan is great for retirees – it helps retirees enjoy a regular income for the rest of their lives.

Tell us about the savings and investment products that your company has
Our target savings and investment products cover a wide range of personal and business needs and they all come bundled with life insurance protection. Let me also add that we didn’t just sit down and started rolling out products. Rather, we conducted series of research and studies to find out what people want. This way, we are certain that each of our products has been designed to meet specific needs of the people and what they can afford. One of our product is Heirs Save plan that helps anyone save as little as N5,000 a month, earn interests, and still receive an additional life insurance payout of up to N5 million if the unfortunate happens.

Another is our savings plans for children’s future education called MyHeirs Plan which helps you put aside as little as N5,000 a month for your child’s education.
We also have a target savings plan for couples as well; Heirs Couples Plan. This plan is beautifully designed for couples, whether married or unmarried. It is an attestation to the fact that life insurance is a business of love.

Heirs Couples Plan helps couples build a solid financial future together. In terms of business needs, our Entrepreneurs Plan helps Small and Medium Entrepreneurs save against future emergencies and uncertainties. It also gives them the assurance of business continuity should the unexpected happen.

Beyond our target savings plans, our suite of pure life insurance plans are great for families and businesses. For instance, Heirs Term Assure provides financial assurance to dependants should the policyholder pass away within an agreed period of time. Our Group Life insurance product is great for employees as it pays three times of an employee’s total emolument to his or her named beneficiary if death occurs while in service. This product also helps each employer fulfil the regulatory requirement contained in the Pension Reform Act 2014. The law requires that each employer must effect a life insurance cover for each employee and the value of such cover must not be less than three times the total emolument of the employee. Details of all our other products can be found on our website.

How does life insurance savings plans differ from the savings offered by other financial institutions?
A life insurance plan offers what other types of investments cannot provide. The difference is in the name itself. A life insurance plan gives additional financial protection beyond what a customer has saved. That’s why we say that your savings aspiration is fully guaranteed whether you survive or pass away.

For instance, if you effect a target savings plan with Heirs Life, we would invest your money for you and add interests to it periodically so that your money continues to grow. In addition to this, we also give you the assurance that if you pass away even on the second day of our contract, we would pay an additional sum of money to your beneficiary.

Customers keep money with financial institutions with the hope that they will remain alive. While this is the way we all think, the reality is that things don’t always turn out that way. People die, and we all know what usually happen to the loved ones left behind. What the other financial institutions would do on the passing of a customer is to pay to the beneficiary the amount saved so far together with interest. Nothing more. Heirs Life, on the other hand, will go a step further to pay a pre-agreed sum to the beneficiary in addition to the accumulated savings and interest.

What makes your insurance company and your offerings different from the others?
I would say our obsession with three things – technology, product innovation and customer satisfaction. At the heart of what we do is our customer, and that is why we keep asking ourselves: How can we offer value to make our customers live confidently?
We have trends on our pulse; we benchmark against global best practices and still localize our insight to ensure that we match the pace of innovation and readiness of our customers. We pride ourselves as a digital insurance company because we are now living in a digital world. For example, the e-Conomy Africa 2020 report by Google and IFC has projected that Africa’s internet economy would hit $180 billion by 2025 and the figure is further projected to increase to $712 billion by 2050. That tells a lot about where our continent is heading in terms of technology.

Our website has been specifically designed to be interactive in such a way that customers can easily choose the products that best meet their needs, make payments for those products, and even lodge claims within minutes without any human interaction. Additionally, our products are developed in such a way that anyone can easily understand them. We have multiple platforms through which customers can easily reach us to make enquiries or have issues resolved. To cap this, our team of dedicated staff are constantly looking to satisfy customers at every step of the way.
Reliability is also an important factor to consider when it comes to insurance matters. You can be rest assured that Heirs Life is a company you can depend on. In terms of financial soundness, I can confirm to you that we are fully capitalized to the tune of N8 billion.

We also have the solid backing of our major shareholder, Heirs Holdings, which is a pan-African investment company with presence in more than 20 countries. We rely on the strength, experience and record of great achievements of Heirs Holdings in different sectors such as financial services, oil & gas, hospitality, energy, real estate and so on. In addition, Heirs Holdings, is led by Tony O. Elumelu, an astute businessman and serial philanthropist who propounds the economic philosophy of Africapitalism – the economic philosophy that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth. This philosophy guides our actions at Heirs Life. We believe in doing well and doing good at the same time.

You mentioned earlier that lack of financial education is one of the reasons people are not open to the idea of savings and investment. What is your company doing to encourage savings culture?
Most people don’t know much about life insurance and how it can help them achieve their financial objectives. That’s why we take financial literacy very seriously at Heirs Life and this is because we believe that once we take time to open people’s eyes to the risks they’re exposed to and explain how life insurance works in a very simple way, they will understand and appreciate its benefit. That way, we would be contributing our quota to financial inclusion and poverty reduction in the country.

We strongly believe that life can be improved with financial education. We all know what happens when a breadwinner passes away. We are familiar with how the wife and children are often without support in the absence of a life insurance cover. At Heirs Life, we help people realise the risks they face on a daily basis and provide them with fair, affordable, and sustainable products to protect them against those risks. Imagine a man who has obtained a loan to provide shelter for his family and suddenly drops dead thereafter. Without life insurance, his wife and children could find themselves under the bridge.

We embark on different forms of sensitization campaigns to educate people. Today, we are on radio, tomorrow we are on TV or newspaper, everyday we are on social media talking about life insurance and how it can change life for better. This interview is also part of our financial education efforts. The good thing is that we are beginning to see the result. On a daily basis, we receive series of enquiries from people on how we can work with them to achieve their financial goals. The high level of interest is encouraging and it shows that our efforts are already yielding positive results.

How best do you think the government can go about achieving an improvement in the cause of financial inclusion?
The government, through our regulator, the National Insurance Commission (NAICOM), is already doing quite a lot in this regard, and we are proud to associate with their efforts. Take for instance the laudable objective of the Commission to increase insurance penetration from its current level of less than one percent to 10 per cent by 2023, with a projected gross written premium value of N1.5 trillion. That will surely have tremendous positive impact on both individuals and businesses.

The Commission is focusing on various initiatives such as the enforcement of compulsory insurance policies, insurance education for the public, micro insurance for low income earners, support for a more digital approach to insurance, takaful (Islamic insurance) and others. We will continue to work with the Commission to achieve these laudable objectives.
We also believe that partnerships across various sectors will help increase insurance penetration rate, create prosperity and reduce poverty in our country.