Factors that lead to life insurance policy lapses at zsic life insurance limited

Abstract

The Life Insurance Industry in Zambia has been faced with the problem of policy lapses and ZSIC life Limited is no exception to this problem. The focus of this study was to investigate the factors that led to life insurance policy Lapses at ZSIC life Limited and developing strategies aimed at reducing Life Insurance policy lapses. The study also investigated the demographic characteristics of policy holders who lapsed their policies. The study employed a quantitative research approach. The investigation was carried out at ZSIC life limited head office in Lusaka. Data was collected using a questionnaire with closed ended questions and analyzed in MS excel 2016 and IBM SPSS version 26. The study established that there four groups of factors that led to policy lapses. The first group were Policy holder related factors, which were policyholder’s financial burden and low awareness about the financial protection offered by life insurance policies. The second group was the group of product related factors, namely, Low benefits and low bonuses being offered by the policy. The third group was the group of Insurer related factors, which included; Poor customer care, Poor rapport with policyholders and Complex policy revival procedures, the fourth group was the group of Agent related factors, these were; Agents forcing policyholders to lapse the policy and purchase a new one and agents not being well trained to respond to the changing insurance needs of the policyholders. The study established that age, sex, marital status, policyholder’s level of education and employment type were important demographic moderators in the policy lapse decision. Therefore, the study recommends that; when underwriting the investment policies, ZSIC Life should conduct financial underwriting of the life insurance policy proposer, ZSIC Life should be conscious of proposers who are male, aged between 41 to 50 years, married, and are proposing an investment policy. ZSIC Life should become more innovative to increase the benefits of the life insurance policies, during on boarding of the client, ZSIC Life should provide client with information on possible policy lapses and the available options to manage the lapse, ZSIC Life should review the policy reinstatement procedure and make it more user friendly to allow policyholders to revive lapsed policies with very minimal challenges. The study also recommends that the ZSIC Life invests in customer care to always be in the face of the customers and keep collecting the know your customer information to keep track of the customer’s insurance needs and any challenges in premium payments. The study further recommends that there is need for further investigation on the extent of the financial impact of policy lapses on the whole Zambian life insurance industry. Keywords: Insurance, insurer, lapse, policy, insured, premium.