Abstract
Life Insurance contract is that under which one party pays a certain sum of money referred to as premium to another party in return on the happening of specified contingency (ices). These contingencies include: deaths, maturity, surrender lapsed and paid-up. These however, operate simultaneously as mutually exclusive events that impinge negatively on the life assurance portfolio.Most life assurance policyholders complain of the adverse effect of inflation on the policy values at the time of payment on the happening of the contingencies. This has resulted in a high rate of lapse, surrender and conversion to paid-up status. This study therefore, investigates the effects of these multiple decrements on life assurance portfolios, which resulted in the hypothesis propounded and tested in this research. Based on the findings, the study recommends that life insurance companies should enlighten the public more on the benefits of life assurance and evolve some incentives so as to avoid the negative impact of these modes of decrement on life assurance portfolios.
Highlights
Prior to the Nigerian independence in 1960, insurance companies in Africa were largely branches of overseas foreign companies who underwrote business locally and exported almost in whole premiums by way of reinsurance and repatriation of profits to their mother companies.On attainment of independence between 1960 and 1975, African countries took over and largely nationalized their respective economic sectors
The study recommends that life insurance companies should enlighten the public more on the benefits of life assurance and evolve some incentives so as to avoid the negative impact of these modes of decrement on life assurance portfolios
Objectives of the Study This study evaluates the factors responsible for the increased life – policy lapses in the Nigerian insurance industry
Summary
Prior to the Nigerian independence in 1960, insurance companies in Africa were largely branches of overseas foreign companies who underwrote business locally and exported almost in whole premiums by way of reinsurance and repatriation of profits to their mother companies. On attainment of independence between 1960 and 1975, African countries took over and largely nationalized their respective economic sectors. Foreign-ousted companies became either out rightly state –owned parastatals or at best joint ventures between the state-its nationals and the former promoters. Further development in the insurance industry witnessed most of the governments managing most of the insurance companies in Africa. Examples are the National Insurance Corporations of Ethiopia, Traumata, Uganda and Zambia among others. Monopolizing the industry is the state owned Reinsurance Corporation, which were legislated to guarantee income and secure a solid footing for growth. As Adeleke (2000) puts it, life insurance operates on the principle of the sharing of losses among, those exposed to hazard of death
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