The link between financial literacy and security is well established but too many young people are missing the opportunity to protect themselves and their families for the future, according to Abu Dhabi National Insurance Company (Adnic).
Adnic says the insurance sector encounters people all the time who wished they had taken out life insurance sooner, when they were younger and healthier. The company is working to change this by rethinking and re-engineering how people can better plan for the future, starting with young people.
In the same way younger adults learn about property investment, education pathways, or career building, Adnic believes they should also be taught about the importance of life insurance. Raising the level of insurance literacy among young people is a collective responsibility that has been embraced across the industry.
And why is life insurance so important? Adnic points to the universal human desire for security. This quest for security has been a motivating force in the material and cultural growth of societies, with the earliest civilisations relying exclusively on family and tribe cohesiveness for that security. Industrial development eroded this security source, instead it became supplemented by privately purchased and government-provided security programmes. Among the private programmes, life insurance has been a universal response, say Adnic.
Charalampos Mylonas (Haris), deputy CEO and executive vice president – consumer lines underwriting and reinsurance at Adnic, says: “Life insurance still remains one of our best protections. In the event of death, life insurance guarantees families a measure of protection against the adverse financial consequences. It gives individuals a greater sense of economic security and can help to reduce worry and distress. In my view, no other financial instrument can perform this function.”
In recent years, the take-up of life insurance has declined in some of the world’s most advanced countries, which is attributed to advances in modern medicine, increased survivability rates for fatal diseases and a higher overall life expectancy.
Haris added: “The recent trend neglects the fundamentals of why insurance exists in the first place: that nothing is certain. Even though our roads have got safer, you wouldn’t drive a car out of your driveway without having proper motor insurance. In fact, I know some people who wouldn’t think about buying the latest iPhone unless it had some form of damage protection insurance. But why is it that some of us do not apply the same rationale to our lives as we would to our smartphone?”
As an industry, correcting this mindset imbalance presents companies with both an enormous opportunity as well as a moral obligation. Again, this is why it is imperative to engage with younger adults to improve their insurance literacy, says Adnic.